The opinion of the court was delivered by: Royce C. Lamberth Chief Judge U.S. District Court Washington, D.C.
I. Table of Contents................................................................................................................ 1
II. Introduction......................................................................................................................... 3
III. Discussion........................................................................................................................... 9
A. Historical Overview of the FISA State Sponsor of Terrorism Exception as it Relates to Actions Against the Islamic Republic of Iran...................................... 13
1. The Original State Sponsor of Terrorism Exception to Foreign Sovereign Immunity, Section 1605(a)(7) and the Flatow Amendment, Section 1605 Note, and Litigation Against Iran for its Provision of Material Support to Terrorist Organizations............................................. 14
2. Setbacks for Plaintiffs: The D.C. Circuit's Decision in Cicippio-Puleo.. 22
3. The Never-Ending Struggle to Enforce Judgments Against Iran............. 27
B. Section 1083 of the 2008 NDAA and the Creation of a Terrorism Exception, Section 1605A....................................................................................................... 44
1. New Federal Cause of Action................................................................... 44
2. Punitive Damages..................................................................................... 48
3. Compensation for Special Masters........................................................... 49
4. More Robust Provisions for the Execution of Civil Judgments............... 49
C. Retroactive Application of Section 1605A to Cases Previously Filed Under Section 1605(a)(7)................................................................................................ 52
1. Section 1083(c)(2) -- Prior Actions........................................................... 53
2. Section 1083(c)(3) -- Related Actions....................................................... 55
3. The 60-Day Rule -- Filing Deadline for Cases Based on Prior Actions Under Section 1605(a)(7)......................................................................... 56
4. Section 1083(c)(2)(B) -- Defenses Waived: Res Judicata, Collateral Estoppel, and Statute of Limitations Are Deemed Waived to the Extent that those Defenses Relate to Claims Litigated in a Prior Action Under Section 1605(a)(7).................................................................................... 56
D. Efforts to Obtain Retroactive Treatment Under the New Terrorism Exception, Section 1605A....................................................................................................... 58
E. Examination of Section 1083(c) of the 2008 NDAA Under Article III of the United States Constitution.................................................................................... 62
1. Principles of Law -- The Independence of the Federal Judiciary Under Article III and the Finality of Judgments.................................................. 66
2. Analysis of the Constitutional Question in Light of the Supreme Court's Jurisprudence............................................................................... 76
a. Does Section 1083(c)(3) Direct the Reopening of Final Judgments Entered Before its Enactment and Therefore Contravene Article III as Construed by the Supreme Court in Plaut?............................................................................................ 77
b. Assuming that Section 1083(c)(3) Does Not Direct the Reopening of Final judgments, Does the Waiver of Res Judicata and Collateral Estoppel Effect of any Prior Terrorism FSIA Action Nonetheless Offend Article III because Congress has Directed the Courts to Ignore Fundamental and Longstanding Judicial Doctrines?................................................. 86
3. Additional Considerations........................................................................ 96
F. Analysis of Whether Actions Under Section 1605(a)(7) Have Qualified for Retroactive Treatment Under Section 1605A..................................................... 102
1. The Belt-and-Suspenders Plaintiffs: Those Who Have Invoked both Section 1083(c)(2) and (c)(3).................................................................. 104
2. The Related-Action Plaintiffs: Those Who Have Filed New Actions Pursuant to Section 1083(c)(3)............................................................... 115
3. The Do-Nothing Plaintiffs: Those Who Have Invoked Neither Section 1083(c)(2) Nor (c)(3) in Their Efforts to Retroactively Claim the New Entitlements Under Section 1605A........................................................ 119
4. General Guidance for All Cases............................................................. 125
G. Service of New Claims in Pending Cases........................................................... 126
H Guidance for Plaintiffs Who May Wish to Pursue Relief Under Rule 60 of the Federal Rules of Civil Procedure........................................................................ 133
I. Compensation for Special Masters..................................................................... 137
J. Motions for Appointment of Receivers.............................................................. 143
K. A Call for Meaningful Reform........................................................................... 156
L. An Invitation for the United States to Participate in These Actions................... 186
IV. Conclusion...................................................................................................................... 187
For more than a decade now, this Court has presided over what has been a twisting and turning course of litigation against the Islamic Republic of Iran under the state sponsor of terrorism exception of the Foreign Sovereign Immunities Act (FSIA). Despite the best intentions of Congress and moral statements of support from the Executive Branch, the stark reality is that the plaintiffs in these actions face continuous road blocks and setbacks in what has been an increasingly futile exercise to hold Iran accountable for unspeakable acts of terrorist violence.*fn1
The cases against Iran that will be addressed by the Court today involve more than one thousand individual plaintiffs. Like countless others before them, the plaintiffs in these actions have demonstrated through competent evidence-including the testimony of several prominent experts in the field of national security-that Iran has provided material support to terrorist organizations, like Hezbollah and Hamas, that have orchestrated unconscionable acts of violence that have killed or injured hundreds of Americans. As a result of these civil actions, Iran faces more than nine billion dollars in liability in the form of court judgments for money damages. Despite plaintiffs' best efforts to execute these court judgments, virtually all have gone unsatisfied.
This consolidated opinion focuses on recent legislative changes in this extraordinary area of the law, as implemented by Congress last term in § 1083 of the 2008 National Defense Appropriations Act for Fiscal Year 2008 (2008 NDAA). See Pub. L. No. 110-181, § 1083, 122 Stat. 3, 338--44. Section 1083 completely repeals the original state sponsor of terrorism exception-28 U.S.C. § 1605(a)(7)-which was originally enacted in 1996, and enacts in its place a new exception-28 U.S.C. § 1605A-that is in many ways more favorable to plaintiffs. This new statute provides, among other reforms, a new federal cause of action against state sponsors of terrorism and allows for awards of punitive damages in these cases. Even more significantly, however, the reforms implemented through § 1083 last year add a number of measures that are intended to help plaintiffs succeed in enforcing court judgments against state sponsors of terrorism, such as Iran.
The primary purpose of this opinion is to consider whether and to what extent these recent changes in the law should apply retroactively to a number of civil actions against Iran that were filed, and, in many instances, litigated to a final judgment prior to the enactment of the 2008 NDAA. In this particular instance, Congress has provided express guidance in § 1083(c) with respect to how § 1605A may be applied retroactively to reach a host of cases that were filed under the original terrorism exception, § 1605(a)(7). In considering this retroactivity question, the Court will address a variety of other legal and procedural issues relating to what may be another lengthy course of litigation against Iran.
As is often the case in this area of the law that the Supreme Court has called sui generis, see Austria v. Altmann, 541 U.S. 677, 698 (2004), this Court must sometimes confront novel legal questions, including constitutional issues of first impression. Today's decision is no different. This Court must address whether § 1083(c) impermissibly directs the reopening of final judgments in violation of Article III of the Constitution. See Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 241 (1995). The Court's attentiveness to this potentially unconstitutional application of § 1083(c) was heightened significantly by provisions of § 1083(c) that direct courts to essentially disregard the firmly established judicial doctrines of res judicataand collateral estoppel with respect to any matters litigated in a prior FSIA terrorism case.
To the extent that § 1083(c) might be construed as directing the reopening of final judgments entered under the former version of the terrorism exception, § 1605(a)(7), it would usurp the prerogative of the judiciary to decide cases under Article III and thereby offend the principle of separation of powers enshrined within our Constitution. In light of this issue's significance with respect to ongoing litigation against Iran, this Court addresses the Article III question in Part E of this opinion. After careful analysis as set forth below, this Court holds that the statute withstands constitutional scrutiny.
Today, the Court also reaches an even more fundamental conclusion: Civil litigation against Iran under the FSIA state sponsor of terrorism exception represents a failed policy. After more than a decade spent presiding over these difficult cases, this Court now sees that these cases do not achieve justice for victims, are not sustainable, and threaten to undermine the President's foreign policy initiatives during a particularly critical time in our Nation's history. The truth is that the prospects for recovery upon judgments entered in these cases are extremely remote. The amount of Iranian assets currently known to exist with the United States is approximately 45 million dollars, which is infinitesimal in comparison to the 10 billion dollars in currently outstanding court judgments.*fn2 Beyond the lack of assets available for execution of judgments, however, these civil actions inevitably must confront deeply entrenched and fundamental understandings of foreign state sovereignty, conflicting multinational treaties and executive agreements, and the exercise of presidential executive power in an ever-changing and increasingly complex world of international affairs.
Unfortunately, the enactment of § 1083 of the 2008 NDAA continues and expands the terrorism exception and its failed policy of civil litigation as the means of redress in these horrific cases. The availability of new federal claims under § 1605A with punitive damages, when combined with the broad retroactive reach accorded to this new statute, means that liability in the form of billions of dollars more in court judgments will continue to mount and mount quickly.
As a result of these latest reforms, the victims in these cases will now continue in their long struggle in pursuit of justice through costly and time-consuming civil litigation against Iran. They will do this at a time in our Nation's history when the President has taken bold and unprecedented steps in an attempt to improve relations with that foreign power while pressing forward on crucial issues, such as the grave threat of nuclear proliferation posed by Iran. Regrettably, the continuation in § 1083 of the same flawed policy that has failed plaintiffs in these actions for over a decade may only stoke the flames of unrealistic and unmanageable expectations in these terrorism victims who so rightly deserve justice, which may in turn serve only to expose the Administration to an unprecedented burden in its management of United States foreign policy towards Iran.
In view of these considerations, the Court will respectfully urge the President and Congress to seek meaningful reforms in this area of law in the form of a viable alternative to private litigation as the means of redress for the countless deaths and injuries caused by acts of terrorism. In Part K of the opinion and in the Conclusion, this Court will speak candidly about the challenges, complexities, and frustrations borne out by these civil actions over the past decade in an effort to urge our political leaders to act. If the decade-long history of these FSIA terrorism actions has revealed anything, it is that the Judiciary cannot resolve the intractable political dilemmas that frustrate these lawsuits; only Congress and the President can. Today, at the start of a new presidential administration-one that has sought engagement with Iran on a host of critical issues-it may be time for our political leaders here in Washington to seek a fresh approach.*fn3
To assist this Court in these matters going forward, the Court will invite the United States to participate in these actions by filing a brief in response to the many issues addressed in this opinion. The Court encourages the United States to express its views regarding this litigation, but, more importantly, the Court hopes the Government might take this opportunity to give due consideration to whether there might be a more viable system of redress for these tragic and difficult cases. With the daunting national security challenges that confront the President with respect to Iran, our political leaders should candidly acknowledge the challenges and pitfalls of these terrorism lawsuits. The Court fears that if reforms are not achieved in the near future, these civil suits against Iran may undermine the President's ability to act at a time when it matters most.
Today's omnibus opinion consists of twelve parts and is intended to serve a case management function in light of the significant changes in the law relating to these civil suits against Iran. Thus, today's ruling is consistent with this Court's inherent authority to manage the docket. See, e.g., In re Fannie Mae Sec. Litig., 552 F.3d. 814, 822 (D.C. Cir. 2009) ("District judges must have authority to manage their dockets, especially during massive litigation...."). A separate order consistent with this opinion will issue this date.
The Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. §§ 1330, 1602--1611, is the sole basis of jurisdiction over foreign states in our courts. E.g., Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989); Prevatt v. Islamic Republic of Iran, 421 F. Supp. 2d 152, 157--58 (D. D.C. 2006) (Lamberth, J.). Enacted in 1976, the FSIA codifies a restrictive theory of foreign state sovereign immunity by which states are generally immune from the jurisdiction of courts of the United States, subject to a few carefully delineated exceptions. See, e.g., Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 488--89 (1983);Price v. Socialist People's Libyan Arab Jamahiriya, 294 F.3d 82, 87 (D.C. Cir. 2002). In the original FSIA enactment, exceptions to foreign sovereign immunity included cases in which a foreign state had either expressly or implicitly waived its immunity and cases relating to the commercial activities of a foreign sovereign within the United States. See Act of Oct. 21, 1976, Pub. L. No. 94-583, 90 Stat. 2891; see also §§ 1605(a), 1605A (codification of current FSIA exceptions); Verlinden, 461 U.S. at 488 (discussing key exceptions under the FSIA).
The state sponsor of terrorism exception of the FSIA was first enacted in 1996 as part of Mandatory Victims Restitution Act of 1996, which was itself part of the larger Antiterrorism and Effective Death Penalty Act of 1996. Pub. L. No. 104-132, § 221(a)(1)(C), 110 Stat. 1214, 1241 (formerly codified at § 1605(a)(7)). As noted, however, the original exception at § 1605(a)(7) was repealed last year by the 2008 NDAA, § 1083(b)(1)(A)(iii), and replaced with a new exception at § 1605A. It is unclear why Congress chose to repeal rather than simply amend the prior statute. See H.R. REP. NO. 110-477, at 1001 (2007) (Conf. Rep.) (discussing § 1605A but omitting discussion of why Congress repealed, instead of amended, § 1605(a)(7)). Perhaps members of Congress wanted to reinforce the significance of their overhaul of the terrorism exception. Whatever the case may be, it is important at the outset for this Court to offer some notes of clarification and historical background information in an effort to avoid any confusion in the ensuing discussion.
The Court's analysis today must simultaneously consider two separate and distinct versions of the terrorism exception of the FSIA-the now-repealed version of the terrorism exception, § 1605(a)(7), and the new version, § 1605A. While the prior version of the exception, § 1605(a)(7), and the new version, § 1605A, differ in many fundamental respects, it is important to keep in mind that the basic grant of subject matter jurisdiction for actions against state sponsors of terrorism remains unchanged. Thus, it makes little difference whether one refers to § 1605(a)(7) or § 1605A when addressing the degree to which foreign sovereign immunity has been removed, subjecting designated state sponsors of terrorism to lawsuits in our courts. Indeed, the language eliminating sovereign immunity in the new exception, § 1605A, is virtually identical to the operative language in § 1605(a)(7). Compare § 1605(a)(7) with § 1605A(a)(1). Accordingly, in those instances in which the Court is merely referring to the grant of subject matter jurisdiction afforded by the virtue of the FSIA's terrorism exception, it will do so broadly, without any additional effort to underscore the two different statutes, as the two provisions are in fact indistinguishable in terms of the basic jurisdiction conferring language.
While the grant of subject matter jurisdiction for suits against state sponsors of terrorism is virtually unchanged, the latest version of the terrorism exception, § 1605A, adds substantive rights and remedies that were not available previously. As noted above, § 1605A is a much more expansive provision, one which provides a federal cause of action, as well as many other statutory entitlements. These new rights and remedies are the central focus of today's decision. The issue is whether the plaintiffs in actions that were filed, at least initially, under the now-repealed § 1605(a)(7), can now avail themselves of the additional entitlements associated with the new exception, § 1605A. Thus, to extent that some of these plaintiffs are unable to claim the benefits of the new terrorism law retroactively, then the prior exception, § 1605(a)(7)-even though now repealed-remains viable and indeed is the controlling source of law in their cases. This is consistent with both the guidance provided by Congress in § 1083(c) of the 2008 NDAA and the general presumption against the retroactive application of laws. See Landgraf v. USI Film Prods., 511 U.S. 244, 286 (1994) ("The presumption against statutory retroactivity is founded upon sound considerations of general policy and practice, and accords with long held and widely shared expectations about the usual operation of legislation."). Thus, when dealing with the nuts and bolts of the retroactivity analysis, especially in Part D below where the Court looks individually at each of the 20 cases in this opinion, it is important to keep the two versions of the exception separate and distinct. As underscored recently by the Court of Appeals for this Circuit, terrorism cases that were filed prior the enactment of the 2008 NDAA, and which do not qualify for retroactive treatment under the new exception, are governed by the prior statute, § 1605(a)(7). See Simon v. Republic of Iraq, 529 F.3d 1187, 1192 (D.C. Cir. 2008), rev'd on other grounds sub. nom Republic of Iraq v. Beaty,129 S.Ct. 2183 (2009); accord Oveissi v. Islamic Republic of Iran, 573 F.3d 835(D.C. Cir. 2009); La Reunion Aerienne v. Socialist People's Libyan Arab Jamahiriya, 533 F.3d 837, 845 (D.C. Cir. 2008); Owens v. Republic of Sudan, 531 F.3d 884, 887 (D.C. Cir. 2008).
A. HISTORICAL OVERVIEW OF THE FSIA STATE SPONSOR OF TERRORISM EXCEPTION AS IT RELATES TO ACTIONS AGAINST THE ISLAMIC REPUBLIC OF IRAN
The new terrorism exception-§ 1605A-clears away a number of legal obstacles, including adverse court rulings, that have stifled plaintiffs' efforts to obtain relief in civil actions against designated state sponsors of terrorism. In fact, these reforms are in part a legislative fix to certain adverse precedent from the D.C. Circuit because "§ 1605A(c) abrogates CicippioPuleo v. Islamic Republic of Iran, 353 F.3d 1024 (D.C. Cir. 2004), by creating a federal right of action against foreign states, for which punitive damages may be awarded." Simon, 529 F.3d at 1190. Thus, to fully grasp the significance these latest reforms, it is important to have some understanding regarding the manner in which the state sponsor of terrorism exception was shaped over time through the jurisprudence of this Circuit. More fundamentally, however, this historical backdrop is essential to the Court's analysis of the Article III separation-of-powers issue below in Part E, as well as for the Court's conclusion in Part K that even greater reforms in the law are necessary.
Accordingly, the Court will now briefly provide a historical overview of the state sponsor of terrorism exception, as it was originally constituted under § 1605(a)(7) (repealed), and the so-called Flatow Amendment to that exception,. This part of the discussion will examine some of the early litigation against Iran before this Court in cases arising out of Iran's provision of material support and resources to terrorist organizations, such as Hamas and Hezbollah. The important historical background that follows breaks down roughly into three parts. The Court will begin with a discussion of Flatow v. Islamic Republic of Iran, 999 F. Supp. 1 (D.D.C. 1998) [hereinafter Flatow I] (Lamberth, J.), which was the first case in the country to be decided against Iran under the state sponsor of terrorism exception. After discussing this Court's ruling in Flatow, this Court will then review the decision of the D.C. Circuit Court of Appeals in Cicippio-Puleo, 353 F.3d 1024, in which the Court found that neither § 1605(a)(7) nor the Flatow Amendment furnish a cause of action against a foreign state. This Court examines the negative consequences and practical implications of that ruling for plaintiffs in these terrorism cases. After examining the fallout from Cicippio-Puleo, this Court proceeds to address what has been the greatest problem for these plaintiffs, and that is the fact that there are simply not sufficient Iranian assets that are amenable to attachment or execution in satisfaction of judgments entered against Iran under the FSIA terrorism exception.*fn4
1. The Original State Sponsor of Terrorism Exception to Foreign Sovereign Immunity, Section 1605(a)(7) and the Flatow Amendment, Section 1605 Note, and Litigation Against Iran for its Provision of Material Support to Terrorist Organizations
The state sponsor of terrorism exception to foreign sovereign immunity applies only to foreign sovereigns officially designated as state sponsors of terrorism by the State Department. See § 1605A(a)(2)(A)(i)(I); § 1605(a)(7)(a) (repealed). This exception to foreign sovereign immunity is commonly known as the "terrorism exception." See, e.g., Kilburn v. Socialist People's Libyan Arab Jamahiriya, 376 F.3d 1123, 1126 (D.C. Cir. 2004). Under the exception, foreign sovereign immunity is eliminated in two different categories of terrorism cases: (1) those in which the designated foreign state is alleged to have committed certain acts of terrorism, i.e., torture, extra-judicial killing, aircraft sabotage, or hostage taking; and (2) those in which the designated state is alleged to have provided "material support or resources" for such terrorist acts. See § 1605A(a)(1); § 1605(a)(7) (repealed). Thus, a designated state sponsor of terrorism might be held to account for its specific acts of terrorism, as well as, more broadly speaking, its "provision of material support or resources" in furtherance of acts of terrorism. See § 1605A(a)(1); § 1605(a)(7) (repealed).
The statute is intended to protect American victims of state-sponsored terrorism, and therefore only United States citizens and nationals may rely on its grant of subject matter jurisdiction. See § 1605A(a)(1); § 1605(a)(7) (repealed); see also Acosta v. Islamic Republic of Iran, 574 F. Supp. 2d. 15, 25--26 (D.D.C. 2008) (Lamberth, C.J.)(denying claims of victim, Rabbi Meir Kahane, who had voluntarily renounced his U.S. citizenship years prior to his assassination by Islamic terrorists). Thus, the victim or claimant in an action against a state sponsor of terrorism must have been a United States citizen or national at the time of the incident that gave rise to his claim(s). See Acosta, 574 F. Supp. 2d at 26.
Most of the actions in this Court against Iran have proceeded under that portion of the terrorism exception relating to "the provision of material support or resources" for terrorist acts. See, e.g., Flatow I, 999 F. Supp. 1; Eisenfeld v. Islamic Republic of Iran, 172 F. Supp. 2d 1 (D.D.C. 2000) (Lamberth, J.); Heiser v. Islamic Republic of Iran, 466 F. Supp. 2d 229 (D.D.C. 2006) (Lamberth, J.). The terrorism exception adopts the definition of "material support or resources" set forth in the criminal code at 18 U.S.C § 2339A(b)(1):
[T]he term "material support or resources" means any property, tangible or intangible, or service, including currency or monetary instruments or financial securities, financial services, lodging, training, expert advice or assistance, safehouses, false documentation or identification, communications equipment, facilities, weapons, lethal substances, explosives, personnel (1 or more individuals who may be or include oneself), and transportation, except medicine or religious materials[.]
See § 1605A(h)(3) (incorporating § 2339A(b)(1) by reference); see also § 1605(a)(7) (repealed).
This Court has determined that "the routine provision of financial assistance to a terrorist group in support of its terrorist activities constitutes 'providing material support and resources' for a terrorist act within the meaning of the [terrorism exception of the FSIA]." Flatow I, 999 F. Supp. 1 at 19. Additionally, this Court has found that "a plaintiff need not establish that the material support or resources provided by a foreign state for a terrorist act contributed directly to the act from which his claim arises in order to satisfy 28 U.S.C. § 1605(a)(7)'s statutory requirements for subject matter jurisdiction." Id. In other words, there is no "but-for" causation requirement with respect to cases that rely on the material support component of the terrorism exception to foreign sovereign immunity; "[s]ponsorship of a terrorist group which causes personal injury or death of United States national alone is sufficient to invoke jurisdiction." Id.; see also Kilburn, 376 F.3d at 1129 (holding that Liyba's actions need not be the "but for" causation of an act of terrorism for the purpose of establishing subject matter jurisdiction under the terrorism exception). Once the requirements for jurisdiction over a foreign state are satisfied under the FSIA, then that foreign state can be held liable in a civil action "in the same manner and to the same extent as a private individual under like circumstances." § 1606.
When the FSIA state sponsor of terrorism exception was first enacted in April of 1996, it was far from clear whether that statute, § 1605(a)(7), in and of itself, served as a basis for an independent federal cause of action against foreign state sponsors of terrorism. While the waiver of foreign sovereign immunity was clear, and hence the provision authorized courts to serve as a forum to adjudicate certain terrorism cases, questions remained regarding whether any civil claims or money damages were available by virtue of that enactment. To clarify matters, Congress created what is commonly referred to as the Flatow Amendment, which was enacted a mere five months after the state sponsor of terrorism exception as part of the Omnibus Consolidated Appropriations Act, 1997. See Pub. L. 104-208, § 589, 110 (1996), 110 Stat. 3009-1, 3009-172 (codified at 28 U.S.C. § 1605 note). The Flatow Amendment provides in pertinent part that:
An official, employee, or agent of a foreign state designated as a state sponsor of terrorism... while acting within the scope of his office, employment, or agency shall be liable to a United States national or the national's legal representative for personal injury or death caused by acts of that official, employee, or agent for which courts of the United States may maintain jurisdiction under section 1605(a)(7) of title 28, United States Code [repealed] for money damages which may include economic damages, solatium, pain, and suffering, and punitive damages if the acts were among those described in section 1605(a)(7). § 1605 note.
The amendment is named for Alisa Michelle Flatow, a 20-year-old Brandeis University student from New Jersey who was mortally wounded in a suicide bombing attack on the Gaza strip in April of 1995. Alisa Flatow's father, Stephen Flatow, was one of the prime movers behind the state sponsor of terrorism exception, and he successfully lobbied to have the amendment incorporated as part of § 1605. See, e.g., Neely Tucker, Pain and Suffering; Relatives of Terrorist Victims Race Each Other to Court, but Justice and Money are Both Hard to Find, WASH. POST, Apr. 6, 2003, at F1 [hereinafter Tucker, Pain and Suffering] (recalling Stephen Flatow's lobbying efforts on behalf of the anti-terrorism legislation); see also Ruthanne M. Deutsch, Suing State-Sponsors of Terrorism Under the Foreign Sovereign Immunities Act:
Giving Life to the Jurisdictional Grant After Cicippio-Puleo, 38 INT'L LAW. 891 (2004) (discussing legislative history of the Flatow Amendment and collecting sources);SUITS AGAINST TERRORIST STATES, supra note 4, at 5--7 (discussing legislative history of § 1605(a)(7) and Flatow Amendment).
Stephen Flatow filed suit in this Court shortly after the enactment of the Flatow Amendment. As administrator of Alisa Flatow's estate, plaintiff asserted a wrongful death claim and a claim for Alisa's conscious pain and suffering prior to her death. See Flatow I, 999 F. Supp. at 27--29. Plaintiff also asserted solatium claims for the mental anguish and grief suffered by the decedent's parents and siblings as a result of her murder by terrorists. See id. at 29--32. Plaintiff also sought punitive damages. See id. at 32--35. Iran did not enter an appearance in the action and has never appeared in any FSIA terrorism action to date. See id. at 6.*fn5
The Flatow case was the first in the country to be decided against Iran under the terrorism exception to the FSIA. See 999 F. Supp. at 6 n.2. In that decision, this Court examined the statutory language of the terrorism exception, § 1605(a)(7), and the Flatow Amendment, § 1605 note, in pari materia and found that those provisions collectively established both subject matter jurisdiction and federal causes of actions for civil lawsuits against state sponsors of terrorism. See id. at 12--13. This Court also ruled that the Flatow Amendment was intended to ensure large punitive damage awards against state sponsors of terrorism. See id. In this Court's view, the express provision of punitive damages in the Flatow Amendment, in conjunction with the provisions's legislative history, including statements by the Amendment's co-sponsors, Representative Jim Saxton and Senator Frank Lautenberg of New Jersey, demonstrated that Congress believed punitive damage awards were absolutely necessary to ensure that civil actions against state sponsors of terrorism would effectively deter those nations from perpetuating international terrorism. See id. Thus, the Flatow Amendment served as an exception to the general rule, as expressed in § 1606 of the FSIA, that foreign sovereigns are not to be held liable for punitive damages.
During a two-day hearing in March of 1998, plaintiff proceeded in the manner of a non-jury trial. Id. at 6. The evidence presented to the Court at that time demonstrated by clear and convincing evidence that Iran was the sole source of funding for the Shaqaqi faction of Palestine Islamic Jihad, a small terrorist cell that claimed responsibility for and in fact perpetuated the suicide bombing that gravely wounded Alisa Flatow on April 9, 1995. Id. at 8--9. The suicide bomber rammed a van full of explosives into the number 36 Egged bus that Alisa and others were traveling in on their way to a Mediterranean resort in the Gush Katif community in Gaza. Id. at 7. The resulting explosion destroyed the bus and sent shrapnel flying in all directions. Id. A piece of that shrapnel pierced Alisa's Flatow's skull and lodged in her brain. Id. Once Stephen Flatow learned that his daughter had been injured in the attack, he immediately flew to Israel, and he rushed to the Soroka Medial Center, where Alisa was being treated. Upon his arrival there, however, the attending physician informed Mr. Flatow that his daughter Alisa "showed no signs of brain activity, that all physical functions relied on life support, and that there was no hope for her recovery." Id. at 8. In emotionally powerful testimony before this Court, Stephen Flatow described the heart-wrenching decision he made to have his daughter's life support terminated and her organs harvested for transplant. See id.
This Court ultimately awarded a total of 22.5 million dollars in compensatory damages. More significantly, however, the Court also awarded 225 million dollars in punitive damages, approximately three times Iran's annual expenditures on terrorist activities at that time. See id. at 34. In providing for such a large award of punitive damages against Iran, this Court stressed the importance of such awards as a means to deter states like Iran from supporting terrorist organizations. The Court stated as follows:
By creating these rights of action, Congress intended that the Courts impose a substantial financial cost on states which sponsor terrorist groups whose activities kill American citizens. This Cost functions both as a direct deterrent, and also as a disabling mechanism: if several large punitive damage awards issue against a foreign state sponsor of terrorism, the state's financial capacity to provide funding will be curtailed.
Id.at 33 (emphasis added). The Court also recognized that any punitive damage award would have to be substantial enough to have an appreciable impact in light of Iran's significant annual revenues from oil exports. See id. at 33--34.
At the time the Flatow decision was announced, there was a certain degree of energy and optimism surrounding the action. Senator Frank Lautenberg held a press conference outside this courthouse with Alisa Flatow's parents and their attorneys. They underscored the importance of the Court's decision as a measure of justice for victims of terrorism, and they stressed the importance of holding state sponsors of terrorism accountable for their support of terrorist groups. See Bill Miller & Barton Gellman, Judge Tells Iran to Pay Terrorism Damages; $247 Million Award for Family of U.S. Victim in Gaza, WASH. POST, Mar. 12, 1998, at A1. Steven Perles, one of the attorneys for the Flatows, spoke of Iran's wealth and expressed his belief that the Flatows would "collect the entirety of the judgment." See id. At the time, the popular sentiment was that terrorism victims were going to "sue the terrorists out of business." See Tucker, Pain and Suffering, supra. In the years immediately following the Flatow decision, many more plaintiffs relied on the original terrorism exception, § 1605(a)(7), in combination with the Flatow Amendment, to successfully litigate cases against Iran. See, e.g., Stern v. Islamic republic of Iran, 271 F. Supp. 2d 286 (D.D.C. 2003) (Lamberth, J.); Hutira v. Islamic Republic of Iran, 211 F. Supp. 2d 115 (D.D.C. 2002) (Lamberth, J.); Eisenfeld, 172 F. Supp. 2d 1.*fn6 Large judgments against the state sponsor of terrorism amassed quickly. Unfortunately, in most cases, the victories obtained by plaintiffs in this courthouse merely signaled the beginning of what would become a long, bitter, and often futile quest for justice.
2. Setbacks for Plaintiffs: The D.C. Circuit's Decision in Cicippio-Puleo
Nearly six years following the Flatow decision, and contrary to what this Court and others had determined, the D.C. Circuit Court of Appeals held that "[p]lainly neither section § 1605(a)(7) nor the Flatow Amendment, separately or together, establishes a cause of action against foreign state sponsors of terrorism." Cicippio-Puleo, 353 F.3d at 1027. According to the Court of Appeals, the original terrorism exception to the FSIA, § 1605(a)(7), was "merely a jurisdiction conferring provision," and therefore it did not create an independent federal cause of action against a foreign state or its agents. Id. at 1032. In other words, the prior version of the terrorism exception, § 1605(a)(7), merely waived foreign sovereign immunity for designated terrorist states with respect to actions taken by those states in furtherance of international terrorism, but it did not furnish a legal claim for money damages that a terrorism victim might then assert in a lawsuit against Iran or any other designated state sponsor of terrorism. Instead, plaintiffs in terrorism cases were required to find a cause of action based on some other source of law. Id. at 1037.
With respect to the Flatow Amendment, § 1605 note, the Court held that the provision "provides a private right of action only against individual officials, employees, and agents of a foreign state, but not against the foreign state itself." Id. at 1027. Thus, the cause of action furnished by the Flatow Amendment is severely restricted because it applies only to claims against foreign state officials, employees, and agents, "in their individual capacities,as opposed to their official capacities." Id. at 1034 (emphasis in original). In reaching its holding, the Court of Appeals emphasized that a claim against a foreign state official for actions taken within his official capacity on behalf of a foreign government "'is in substance a claim against the government itself'" Id. (citations omitted). As the Court found that neither the plain language nor the legislative history of the Flatow Amendment suggested that Congress intended to impose liability on foreign governments, plaintiffs were precluded from relying on that provision for either claims against Iran or claims based on acts taken by Iranian officials within the scope of their official duties. Id. at 1034--1036. After rendering its ruling the Cicippio-Puleo, the Court of Appeals remanded the action back to this Court in order to enable plaintiffs in that case to amend their complaint to state a cause of action against Iran "under some other source of law, including state law." Id. at 1036.
As a result of the Cicippio-Puleo decision, plaintiffs in FSIA terrorism cases under § 1605(a)(7) began to use that provision as a "'pass-through'" to causes of actions found in state tort law. Bodoff v. Islamic Republic of Iran, 424 F. Supp. 2d 74, 83 (D.D.C. 2006) (Lamberth, J.); see also Pescatore v. Pan Am. World Airways, Inc., 97 F.3d 1, 12 (2d Cir. 1996) (describing how FSIA acts as pass-through to state law by virtue of § 1606) (quoting Zicherman v. Korean Airlines Co, 516 U.S. 217, 229 (1996)). By using the pass-through approach under the earlier version of the terrorism exception, § 1605(a)(7), most terrorism victims who pursued FSIA cases against Iran were in fact able to litigate claims based on the tort law of the state jurisdiction where they were domiciled at the time of the terrorist incident giving rise to the lawsuit.
In the large consolidated case of Peterson v. Islamic Republic of Iran, for example, this Court found that Iran furnished money, weapons, training, and guidance to Hezbollah in direct support of a terrorist plot that culminated in large-scale suicide bombing attack on the United States Marine barracks in Beirut, Lebanon on October 23, 1983. See 264 F. Supp. 2d at 47--59 (D.D.C. 2003) [hereinafter Peterson I] (Lamberth, J.).*fn7 More than 200 American servicemen lost their lives and countless others were injured in the bombing. Prior to September 11, 2001, the attack on the Marines in Beirut was the most deadly terrorist attack ever carried out against American citizens. By examining the claims in that case under a number of sources of state law, this Court awarded to the family members of the deceased servicemen and the injured survivors of the Beirut attack exceeds 2.6 billion dollars and remains one of the largest judgments ever awarded in a FSIA action pursuant to the state sponsor of terrorism exception. See Peterson v. Islamic Republic of Iran, 515 F. Supp. 2d 25, 44--45 (D.D.C. 2007) [hereinafter Peterson II] (Lamberth, J.). Like Peterson, the majority cases addressed in today's opinion stem from the 1983 bombing of the Marine barracks facility in Beirut, Lebanon.
In another action considered today, Bennett v. Islamic Republic of Iran, plaintiffs demonstrated how Iran's financial support of Hamas helped to perpetrate terrorist attacks, including a 2002 suicide bombing incident at Hebrew University in Jerusalem that claimed the life of their 24-year-old daughter. See 507 F. Supp. 2d 117 (D.D.C. 2007) (Lamberth, J.). In Bennett, the plaintiffs relied on California law. Similarly, in Beer v. Islamic Republic of Iran, family members of an American killed in a suicide bombing of a bus in Jerusalem showed how Iran's material support to Hamas in the form of funding, safe haven, training, and weapons, helped to spur on violent suicide attacks in Israel and elsewhere. 574 F. Supp. 2d 1 (D.D.C. 2008) (Lamberth, J.).*fn8 The plaintiffs in Beer relied on New York common law.
But while larger majority of plaintiffs in actions post-Cicippio-Puelo were able to use the pass-through approach to find relief, hundreds of others equally dissevering plaintiffs had their claims denied because they were domiciled in jurisdictions that did not afford them a substantive claim.In the Peterson case, for example, some family members of the Marines and other servicemen who were killed in the 1983 terrorist bombing were barred from asserting intentional infliction of emotional distress claims (IIED) because they lacked standing under the applicable state tort law. Consequently, this Court had to dismiss the IIED claims of family members who were domiciled in either Pennsylvania or Louisiana at the time of the terrorist attack because those jurisdictions would not permit IIED claims by family members who were not physically present at the site of the incident that gave rise to the emotional distress. See Peterson II, 515 F. Supp. 2d at 44--45. Thus, the Pennsylvania and Louisiana plaintiffs in the Peterson action were effectively denied their day in court, and yet they watched as many other similarly situated plaintiffs (including some of their own family members) from different state jurisdictions advanced and ultimately prevailed with their claims for IIED. For those Pennsylvania and Louisiana plaintiffs who were denied relief as so many others succeeded based on precisely the same kinds of claims, based on the same horrific and unquestionably traumatic incident, the result must have seemed both arbitrary and unfair.
In addition to the unfairness caused by a lack of uniformity in the underlying state sources of law, the pass-through approach proved cumbersome and tedious in practical application. In a given case based on a single terrorist incident, this Court would usually have to resolve choice of law problems and then proceed through a lengthy analysis of tort claims under the laws of numerous different state jurisdictions. For example, in the Heiser case, a large consolidated action involving the Khobar towers bombing, this Court issued a 209-page opinion in which it ultimately applied the laws of 11 different state jurisdictions. See 466 F. Supp. 2d 299. In Peterson, this Court had to apply the laws of nearly 40 different jurisdictions in order to resolve the victims' claims. See Peterson II, 515 F. Supp. 2d 25. To efficiently manage these terrorism cases under the pass-through regime imposed by Cicippio-Puleo, this Court would frequently refer the action to special masters after the Court determined under § 1605(a)(7) that Iran provided material support for a terrorist incident that killed or injured Americans.*fn9
Another consequence of the Cicippio-Puleo decision was that the Flatow Amendment could not serve as independent basis for punitive damages awards against Iran. As the Court of Appeals found that the amendment was not intended to provide for claims against foreign states, the bar on punitive damages in § 1606 of the FSIA remained in tact, even with respect to state sponsors of terrorism. Accordingly, large awards of punitive damages, like that which this Court granted in Flatow to deter Iran from sponsorship of terrorist groups, were no longer available in actions against the state of Iran under § 1605(a)(7).*fn10
3. The Never-Ending Struggle to Enforce Judgments Against Iran
In the years since the Flatow decision, a number of practical, legal, and political obstacles have made it all but impossible for plaintiffs in these FSIA terrorism cases to enforce their default judgments against Iran. This Court has examined this fundamental and longstanding problem time and again as plaintiffs before this Court have sought, with very little success, to locate and attach Iranian Government assets in aid of execution of their civil judgments. See, e.g., Bennett v. Islamic Republic of Iran, 604 F. Supp. 2d 152 (D.D.C. 2009) (Lamberth, C.J.); Peterson v. Islamic Republic of Iran, 563 F. Supp. 2d 268 (D.D.C. 2008) [hereinafter Peterson III] (Lamberth, C.J.); Weinstein v. Islamic Republic of Iran, 274 F. Supp. 2d 53 (D.D.C. 2003) (Lamberth, J.); Flatow v. Islamic Republic of Iran, 76 F. Supp. 2d 16 (D.D.C. 1999) [hereinafter Flatow III] (Lamberth, J.); Flatow v. Islamic Republic of Iran, 74 F. Supp. 2d 18 (D.D.C. 1999) [hereinafter Flatow II] (Lamberth, J.). To even begin to appreciate the difficulties plaintiffs face with respect to locating Iranian property in the United States, it is important to first understand the significance of the Iran-Hostage Crisis and its aftermath and, more specifically, the Algiers Accords, the bilateral executive agreement between Iran and the United States that brought about the settlement of the hostage crisis in 1981.
On November 14, 1979, ten days after the start of the Iran hostage crisis in which Iranian revolutionaries seized the United States embassy in Tehran and took most embassy personnel as hostages, President Carter exercised his powers under the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701--1706, and "blocked all property and interests in property of the Government of Iran... subject to the jurisdiction of the United States." Exec. Order No. 12,170, 44 Fed. Reg. 65,729 (Nov. 14, 1979); see Transactions Involving Property in Which Iran or Iranian Entities Have an Interest, 31 C.F.R. § 535.201; see also Dames & Moore v. Regan, 453 U.S. 654, 662--664 (1981) (discussing the Iran Hostage Crisis and President Carter's actions in response to the Iran hostage crisis pursuant to his authority under the IEEPA).
Approximately five months later, as the hostage crisis continued to wane on, President Carter severed diplomatic relations with Iran, and the State Department assumed custody of all Iran's diplomatic and consular property here in the United States. See, e.g., Bennett, 604 F. Supp. 2d at 162--66 (discussing the termination of diplomatic relations with Iran and the State Department's assumption of custody over Iran's diplomatic and consular properties within the United States). The hostage crisis was finally resolved when Iran and the United States executed the Algiers Accords on January 19, 1981, and all hostages were released the following day, just moments after President Regan took office. See Iran-United States: Settlement of the Hostage Crisis, Jan. 18--20, 1981, 20 I.L.M. 223 [hereinafter Algiers Accords]; Dames & Moore, 453 U.S. at 664--65 (discussing the release of the hostages and terms of the Algiers Accords).
As part of the Algiers Accords, the United States agreed in principle to restore the financial position of Iran, in so far as possible, to that which existed prior to November 14, 1979." Algiers Accords, 20 I.L.M. at 223, 224. Additionally, the United States "commit[ted] itself to ensure the mobility and free transfer of all Iranian assets within its jurisdiction." Id. at 223--224. Iran and the United States further agreed to settle all litigation between the two governments, to include any outstanding litigation between the nationals of the two countries as of January, 19 1981. Id. at223--224, 230--232. To this end, the Algiers Accords established an Iran-U.S. Claims Tribunal in the Hague to arbitrate any claims not settled within six moths. Id. at 226, 230--34. Consistent with these commitments to restore Iran's financial position, to facilitate the transfer of Iranian assets, and to have unresolved claims presented to the Iran-Claims Tribunal, the United States agreed to "bring about the transfer" of all Iranian assets held in this country by American banks, with one billion dollars in those assets set aside on account of the Central Bank of Algeria for the payment of any awards entered against Iran by the Claims Tribunal. Id. at 225--27. The Claims-Tribunal would also have jurisdiction to revolve disputes between Iran and the United States concerning each other's compliance with the Algiers Accords. Id. at 231.
To comply with the terms of the Algiers Accords, President Carter issued, and President Regan subsequently ratified, a series of Executive Orders in which the President unblocked the majority of Iran assets within the jurisdiction of the United States and directed United States banks to transfer all Iranian assets to the Federal Reserve Bank of New York, where they would be held or transferred to Iran as directed by the Secretary of the Treasury. See Dames & Moore, 453 U.S. at 665--66. Subsequent Executive Orders and treasury regulations have controlled the transfer of Iranian Assets consistent with the Algiers Accords. See, e.g., Iranian Assets Control Regulations, 31 C.F.R. pt. 535. Thus, practically speaking, there are simply few assets within the United States that are available for plaintiffs to seize in satisfaction of their judgments under the FSIA terrorism exception.
In Dames & Moore, the Supreme Court upheld the validity of actions taken by both President Regan and Carter to settle the Iran Hostage Crisis through the implementation of the Algiers Accords. 453 U.S. 654. Specifically, the Court examined two issues. First, the Court addressed the validity of Executive Orders that nullified all attachments and similar encumbrances on Iranian property in the United States and directed the transfer of Iranian assets to the Federal Reserve Bank of New York for ultimate transfer back to Iran under the terms of the Algiers Accords. Second, the Court addressed Executive Orders that suspended claims pending against Iran in American courts and provided for those claims to be presented to Iran-United States Claims Tribunal for resolution through binding arbitration.
With respect to the termination of attachments on Iran's property and the transfer of Iran's assets, the Court found that Congress had provided in the IEEPA, 50 U.S.C. §§ 1701-- 1706, specific authorization for the President to take those actions. Dames & Moore, 453 U.S. at 674--75. Accordingly, the Court relied on the strong presumption of validity traditionally accorded to such Executive action pursuant to a federal statute, as described in Justice Jackson's famous concurrence in Youngstown Sheet & Tube Co. V. Sawyer, 343 U.S. 579 (1952), and held that, in light of this "specific congressional authorization," it could not find that the power exercised by the President had exceeded the bounds of any powers afforded under the Constitution. Dames & Moore, 453 U.S. at 675. The Court observed: "A contrary ruling would mean that the Federal Government as a whole lacked the power exercised by the President, and that we are not prepared to say." Id. at 674 (citation omitted).
With respect to the suspension of claims, the Court ultimately upheld that action as well, but the Court's rationale was a bit more nuanced. While the Court could not identity a specific authorization from Congress, the Court did find that, over more than two centuries, Congress had either acquiesced in or implicitly approved of the settlement of claims of United States nationals through executive agreement. See id. at 675--687. Thus, in light of what the Court deemed as Congress' consent to the President's actions, the Court held that it could not say that the President's actions in suspending claims against Iran exceeded the President's powers. Id. at 686.*fn11
What few assets of Iran that might be found within jurisdiction of the United States courts since the Algiers Accords are a subject to a dizzying array of statutory and regulatory authorities due in large part to the federal government's obligations under that bilateral executive agreement, but also in part because of the increasing hostility in the relationship between Iran and the United States in the wake of the hostage crisis and the continuous designation of Iran as a state sponsor of terrorism since 1984. In fact, much like the assets of other state sponsors of terrorism, most of Iran's known property or interests in property are blocked, i.e., frozen, or otherwise regulated under any number of United States sanctions programs.*fn12
Beyond the imposition of economic sanctions and other regulatory controls, however, the inviolable doctrines of both foreign sovereign immunity and federal sovereign immunity have often precluded the attachment or execution of property that plaintiffs have identified as belonging to Iran. With respect to foreign sovereign immunity specifically, the FSIA itself has long forestalled plaintiffs' efforts to enforce judgments entered under § 1605(a)(7). This is largely because, much like foreign sovereigns are generally immune from civil suit under the FSIA, see § 1604, any property belonging to a foreign nation is similarly immune from attachment and execution by judgment creditors. See § 1609. The relevant exceptions to the general rule of immunity from the attachment or execution are listed in § 1610. Prior to the enactment of last year's reforms in the 2008 NDAA, however, these exceptions to the general rule of immunity for foreign government property were limited almost exclusively to property relating to the commercial activities of the foreign sovereign within the United States. See § 1610(a) and (b). Given the lack of formal relations between the United States and Iran, these provisions have been of little utility to the judgment creditors of Iran in FSIA terrorism cases. Thus, the FSIA facilitated a somewhat ironic and perverse outcome because on the one hand, in § 1605(a)(7), it created an opportunity for terrorism victims to sue Iran for money damages, while on the other hand, in §§ 1609 and 1610, it denied these victims the legal means to enforce their court judgments.*fn13
In addition to the immunity from attachment or execution that the FSIA has long provided to foreign property, assets held within United States Treasury accounts that might otherwise be attributed to Iran are the property of the United States and are therefore exempt from attachment or execution by virtue of the federal government's sovereign immunity. See Dep't of the Army v. Blue Fox, Inc., 525 U.S. 255 (1999); State of Arizona v. Bowsher, 935 F.2d 332 (D.C. Cir. 1991). As the Supreme Court held in the seminal case of Buchanan v. Alexander, United States sovereign immunity is an extremely broad bar to jurisdiction that prevents creditors from attaching funds held by the United States treasury or its agents. 45 U.S. 20 (1846).
Because the federal government has assumed control over significant portions of what limited Iranian assets remain in the United States, plaintiffs' efforts to enforce judgments under the FSIA have often pitted victims of terrorism against the Executive Branch. Under successive presidential administrations, the Justice Department repeatedly moved to quash writs of attachment issued by judgment creditors of Iran. Two frequently discussed and well-documented examples concern the efforts of Stephen Flatow to enforce his civil judgment, which culminated in litigation against the United States in this Court. See Flatow II, 74 F. Supp. 2d 18; Flatow III, 76 F. Supp. 2d 16. In both cases, this Court had to deny plaintiff relief and thereby granted the federal government's motion to quash.
In the first case, plaintiff issued writs that purported to attach credits held by the United States for the benefit of Iran, including more than 5 million dollars in the United States Treasury Judgment Fund, which had been earmarked to pay an award issued in Iran's favor by the Iran-United States Claims Tribunal. Flatow II, 74 F. Supp. at 20. Plaintiff pointed to the Iranian Assets Control Regulations in support of his argument that money in the Treasury Judgment Fund should be considered Iranian property that is potentially subject to attachment and execution under the FSIA, 1610. See id. (citing 31 C.F.R. § 535.311 (1999)). In rejecting plaintiff's argument, this Court relied on Buchanan and Blue Fox, and held that funds in the United States Treasury-regardless of whether those funds have been set aside to pay a debt to Iran-remain immune from attachment by virtue of United States sovereign immunity. Id. at 21. "In other words, funds held in the U.S. Treasury-even though set aside or 'earmarked' for a specific purpose-remain the property of the United States until the government elects to pay them to who they are owed." Id. Accordingly, as the United States had not waived its sovereign immunity with respect to those funds that had been earmarked to pay a Tribunal Award or other debts to Iran, that money remained exempt from attachment or execution by virtue of federal sovereign immunity. Id. at 23; see also Weinstein, 274 F. Supp. 2d at 58 (holding that funds allegedly owed to Iran in the Treasury's Foreign Military Sales (FMS) Program are immune from attachment by virtue of federal sovereign immunity).
In the second case, plaintiff issued writs of attachment upon three parcels of real estate owned by Iran that once served as the Iranian Embassy and as residences and offices for Iran's diplomatic personnel. Flatow III, 76 F. Supp. 2d at 18. Additionally, plaintiff issued writs of attachment upon two bank accounts that contained funds generated by the State Department's lease of Iran's diplomatic properties. Id. The first of the two accounts was used to pay for the maintenance and repair of Iran's properties. Id. at 19. The second account contained all the profits generated as a result of the lease of Iran's foreign mission properties. Id.
The United States promptly intervened and moved to quash the writs, arguing that real property and the related banks accounts were immune from attachment under the Foreign Missions Act, the FSIA, the IEEPA, the Vienna Convention on Diplomatic Relations, and Article II of the U.S. Constitution. Id. at 19. The plaintiffs countered that because Iran's former embassy properties were being managed and leased out to tenets by the Department of the State under the auspices of the Foreign Missions Act, 22 U.S.C. §§ 4301--4313, the property was being used for a "commercial activity" and therefore satisfied the requirements for attachment under § 1610(a)(7) of the FSIA. See Flatow III, 76 F. Supp. 2d. at 21.
Without reaching any of the more fundamental arguments raised by the government's motion to quash, this Court held that the leasing of Iran's real property by the United States did not qualify as a commercial activity in part because the United States' action in taking custody of Iran's property under the authority of the Foreign Missions Act "was decidedly sovereign in nature." Id. at 23; see also Bennett, 604 F. Supp. 2d at 169 (relying on Flatow to grant United States' motion to quash writs of attachment recently issued on Iran's foreign mission properties). For similar reasons, the Court found that the bank account that was used by the State Department's Office of Foreign Missions (OFM) for the maintenance and repair of Iran's real property was also immune from attachment because the funds within that account were expended by OFM in exercise of its statutory prerogative to provide for the upkeep properties that once housed Iran's foreign mission. Flatow III, at 24. This Court also found that the other account at issue, which simply contained the profits earned on the lease of Iran's property, was immune from attachment as a result of federal sovereign immunity. Id.
In some frustration, this Court observed in Flatow that President Clinton's Administration, including President Clinton himself, had both publicly and privately expressed support for the victims of terrorism and for the plaintiffs in these terrorism cases specifically, and yet the Clinton Justice Department repeatedly fought efforts by these victims to enforce court judgments under the FSIA. See Flatow II, 74 F. Supp. 2d at 26; Flatow III, 76 F. Supp. 2d at 19-- 20. Moreover, as will be discussed below, President Clinton twice blocked reforms to the FSIA that would have subjected Iran's blocked assets to attachment and execution. See infra pp. 39-- 40; SUITS AGAINST TERRORIST STATES, supra note 4, at 10--12 (discussing President's exercise of waiver authority with respect to provisions that would have permitted attachment and execution upon frozen assets of state sponsors of terrorism); see also Flatow, 76 F. Supp. 2d 16 (noting President's first exercise of waiver in the interest of national security of provision that would have permitted attachment of blocked assets). In a letter to the Washington Post cited by this Court in two of its published decisions, Stephen Flatow documented his meetings with President Clinton, including private meetings and phone calls, as well as his meetings with other high ranking members of the Clinton Administration. See Stephen Flatow, In This Case, I Can't Be Diplomatic; I Lost a Child to Terrorism; Now I'm Losing U.S. Support, WASH. POST, Nov. 7, 1999, at B2. Mr. Flatow explained how he grew tremendously frustrated in his long pursuit of justice in which he received statements of support from the Executive Branch, as well as personal assurances of assistance, only to later find that the administration proved to be the most formidable adversary in his efforts to execute judgment upon the blocked assets of Iran. In reflecting on his experiences some years later, Stephen Flatow referred to his litigation against the United States "as a real cat fight." Tucker, Pain and Suffering, supra.
As this Court observed how many plaintiffs struggled to enforce their court judgments in FSIA terrorism cases against Iran, this Court began to refer these judgments as "Pyrrhic Victories." Eisenfeld, 172 F. Supp. 2d at 9; Flatow III, 76 F. Supp. 2d at 27. Moreover, this Court expressed dismay over the fact that the rule of law was being frustrated in these actions. Eisenfeld, 172 F. Supp. 2d at 9. Allowing plaintiffs to go forward with suits under § 1605(a)(7) while not freeing up Iran's assets to satisfy those judgments under § 1610, or through the release of blocked assets under United States' control, was a quintessential example of the federal government promising with one hand what it takes away with the other. In fact, it is not uncommon for plaintiffs to receive mixed signals from Congress and the President in this highly-charged political context. See, e.g., Roeder, 195 F. Supp. 2d at 145 (observing that the political branches of the Government "should not with one hand express support for the plaintiffs and with the other leave it to this Court to play the role of the messenger of bad news").
In view of the challenges that plaintiffs encountered in their efforts to execute judgments against the assets of state sponsors of terrorism here in the United States, Congress did make a number of efforts on behalf of the victims of terrorism to free up blocked assets for judgments under § 1605(a)(7). The first law enacted as part of this effort to free up assets of state sponsors of terrorism was included in the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999. Pub. L. No. 105-277, div. A, tit. I, § 117(a), 112 Stat. 2681-0, 2681-491 (codified at § 1610(f)(1)(A)). That measure created a new exception-§ 1610(f)-which allowed for the first time attachment and execution against blocked assets of state sponsors of terrorism.*fn14 When Congress passed this measure, however, it also provided that the President could waive the provision "in the interest of national security." § 1610(f)(3). Upon signing the bill into law, President Clinton exercised that waiver authority. See Pres. Determ. No.99-1, 63 Fed. Reg. 59,201 (Oct. 21, 1998). In doing so, the President stated:
Absent my authority to waive section 117's attachment provision, it would effectively eliminate the use of blocked assets of terrorist States in the national security interests of the United States, including denying an important source of leverage. In addition, section 117 could seriously impair our ability to enter into global claims settlements that are fair to all U.S. claimants, and could result in U.S. taxpayer liability in the event of a contrary claims tribunal judgment. To the extent possible, I shall construe section 117 in a manner consistent with my constitutional authority and with U.S. international legal obligations, and for the above reasons, I have exercised the waiver authority in the in the national security interest of the United States.
Statement on Signing the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, 2 PUB. PAPERS 1843, 1847 (Oct. 23, 1998). Thus, § 1610(f)(1)(A)-which would have broadly subjected Iranian assets to attachment and execution-was rendered a nullity.*fn15
The following term, Congress passed the Victims of Trafficking and Violence Protection Act of 2000 (VTVPA), in which Congress again tried to subject blocked assets of state sponsors of terrorism to attachment of execution. Pub. L. No. 106-386, § 2002, 114 Stat. 1464, 1541. Specifically, Congress aimed in the VTVPA to resurrect § 1610(f)(1)(A) of the FSIA and thus repealed the waiver authority that was exercised by President Clinton under § 117(d) of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999. See § 2002(f)(2). Oddly enough, however, Congress replaced that earlier waiver provision with a new, and nearly identical provision, that again granted the President the authority to waive § 1610(f)(1)(A) "in the interest of national security." § 2002(f)(1)(B). Upon singing the VTVPA into law, the President again exercised the waiver authority, as granted by Congress, which again rendered § 1610 a nullity. Thus, § 1610(f) remains inapplicable in cases under the FSIA terrorism exception.
More significantly, the VTVPA also directed the Secretary of Treasury to pay the compensatory damages awarded in court judgments to plaintiffs in a limited number of FSIA terrorism cases against Iran or Cuba. § 2002(a). With respect to the payment of judgments against Iran specifically, the VTVPA directed the Secretary of Treasury to make those payments out of the rental proceeds that had been accrued as a result of the federal government's lease of Iranian diplomatic and consular property and from appropriated funds "not to exceed the total of the amount in the Iran Foreign Military Sales Program account within the Foreign Military Sales Fund." § 2002(b).*fn16 Once an eligible plaintiff accepts a payment of compensatory damages from the United States Treasury on a judgment against Iran, the plaintiff's right to pursue that claim is "fully subrogated" to the United States. Id. As a result of the VTVPA, precisely ten cases against Iran qualified for payments from the United States Treasury. See TERRORIST ASSETS REPORT, supra note 2, at 12--15, app. A (discussing VTVPA program for payment of compensatory damage in judgments entered against Iran and Cuba and listing cases). Flatow was among the cases that qualified, and Stephen Flatow, along with plaintiffs in all of the nine other qualifying cases, opted to have their compensatory damages paid by United States. See id.; see also Tucker, Pain and Suffering, supra (discussing Stephen Flatow's acceptance of payment of compensatory damages from the United States Treasury and his ongoing efforts to enforce the punitive damages portion of his judgment against Iran). Subsequent legal enactments have expanded the number of cases with judgments against Iran that are eligible for payments from the United States Treasury. See Foreign Relations Authorization Act, Fiscal Year 2003, Pub. L. No. 107-228, § 686, 116 Stat. 1350, 1411 (2002); Terrorism Risk Insurance Act of 2002 (TIRA), Pub. L. No. 107-297, § 201, 116 Stat. 2322, 2337--39.
In the TRIA, Congress not only expanded the class of plaintiffs eligible for payment from the United States Department of Treasury under the VTVPA, but, even more fundamentally, Congress finally succeeded in subjecting the assets of state sponsors of terrorism to attachment and execution in satisfaction of judgments under § 1605(a)(7). See § 201. The TRIA provides that "[n]otwithstanding any other provision of law," the blocked assets of a terrorist state are subject to attachment or execution to the extent of any compensatory damages awarded against that state under the FSIA terrorism exception. Id. The TRIA does, however, continue to exempt diplomatic and consular property from attachment and execution under § 1610. See § 201(d)(2)(B)(ii). Nonetheless, the TRIA has opened a wide range of blocked assets to attachment and execution by the judgment creditors of state sponsors of terrorism. Thus, the TRIA appears to represent something of a victory for these terrorism victims-whose interests have been most vigorously advanced by members of Congress-over the longstanding objections of the Executive Branch.
In the case of Iran, however, the simple fact remains that very few blocked assets exist. In fact, according to OFAC's latest report, there are only 16.8 million dollars in blocked assets relating to Iran. TERRORIST ASSETS REPORT, supra note 2, at 14, tbl. 1. This amount is inconsequential-a mere drop in the bucket-when compared to the staggering 9.6 billion dollars in outstanding judgments entered against Iran in terrorism cases as of August 2008, which is the last time the Congressional Research Service compiled data on this issue. Id. at 75, app. B, tbl. B-1. The amount of Iranian non-blocked assets within the United States, as reported to OFAC, is similarly inconsequential in comparison to Iran's liability under the FSIA terrorism exception. According to OFAC, the amount of non-blocked Iranian assets is merely 28 million dollars. Id. at 15, tbl. 3.*fn17
The billions of dollars in liability that Iran now faces is likely to increase tremendously as a result of the new federal cause of action under § 1605A, which now includes punitive damages. Thus, Congress has continued to fuel expectations in these actions by broadly subjecting Iran to suit for sponsorship of terrorism while simultaneously ignoring the fact that the prospects for recovery are virtually nonexistent. This fundamental problem is an issue that the Court will explore later in this opinion in Part K below.
B. SECTION 1083 OF THE 2008 NDAA AND THE CREATION OF A NEW TERRORISM EXCEPTION, SECTION 1605A
In light of the significant setbacks that plaintiffs experienced in actions under § 1605(a)(7), Congress implemented a number of major reforms last year. Section 1083 of National Defense Appropriations Act (NDAA) completely repeals § 1605(a)(7) and replaces that provision with a new statute, § 1605A. As noted above, it is important to keep in mind that the exception to foreign sovereign immunity under the new provision, § 1605A, is identical to that which is contained in § 1605(a)(7), but this new law is more comprehensive and more favorable to plaintiffs because it adds a broad array of substantive rights and remedies that simply were not available in actions under § 1605(a)(7).
As noted above, § 1605A accomplishes four basic objectives. This new terrorism statute (1) furnishes a cause of action against state sponsors of terrorism; (2) makes punitive damages available in those actions; (3) authorizes compensation for special masters; and (4) implements new measures designed to facilitate the enforcement of judgments. Each of these four key aspects of § 1605A will now be discussed in turn.
1. New Federal Cause of Action
With respect to the first objective, the new law now expressly provides that designated state sponsors of terrorism may be subject to a federal cause of action for money damages if those terrorist states cause or otherwise provide material support for an act of terrorism that results in the death or injury of a United States citizen or national. See § 1605A(c). This new federal right of action for money damages abrogates Cicippio-Puleo, 353 F.3d 1024, and is a crucial change in the law for hundreds of FSIA terrorism plaintiffs who were not able to rely on state tort law to create a cause of action against Iran previously.
Thanks to the enactment of § 1605A, the inconsistent and varied result that was reached in Peterson and in similar cases under § 1605(a)(7) will be avoided in actions going forward under the new law. Courts can now work from a single federal cause of action that will ensure a greater degrees of fairness to FSIA terrorism plaintiffs while furnishing a level of consistency and uniformity that is critical in matters of foreign relations.*fn18
The new cause of action included with the new terrorism exception § 1605A has a new and expanded statute of limitations. Specifically, § 1605A(b) provides:
An action may be brought or maintained under this section if the action is commenced,or a related action was commenced under section 1605(a)(7) (before the date of the enactment of this section) or [the Flatow Amendment] not later than the later of-
(1) 10 years after April 24, 1996; or
(2) 10 years after the date on which the cause of action arose. § 1605A(b) (emphasis added). The prior statute of limitations applicable to actions under § 1605(a)(7) was simply 10 years from the date the cause of action arose (leading to a cut-off date in April 2006), subject, in some instances, to equitable tolling. See § 1605(f) (repealed by § 1083(b)). Accordingly, many new actions that might have been barred by the statute of limitations for § 1605(a)(7) may now move forward under § 1605A.
As § 1605A establishes a new federal cause of action against state sponsors of terrorism, this Court will have to determine what basic principles of law should be applied to resolve claims sounding in tort pursuant to this new private right of action under the FSIA. This is an important issue that many judges of this Court grappled with through the application of the Flatow Amendment in FSIA terrorism cases that reached final judgments prior to the Circuit's ruling in Cicippio-Puleo.*fn19 At that time, judges of this Court frequently referred to "federal common law" as providing the rule of decision for claims under the FSIA. See, e.g., Stethem v. Islamic Republic of Iran, 201 F. Supp. 2d 78, 89 (D.D.C. 2002) (Jackson, J.); Wagner v. Islamic Republic of Iran, 172 F. Supp. 2d 128, 134 (D.D.C. 2001) (Jackson, J.); Flatow I, 999 F. Supp. 1 at 15.
In Bettis v. Islamic Republic of Iran, however, which one of the last FSIA terrorism cases decided by the Circuit prior to Cicippio-Puleo, the Court of Appeals cautioned trial judges against the use of the term "federal common law." 315 F.3d 325, 333 (D.C. Cir. 2003). The appeal in Bettis involved claims for intentional infliction of emotional distress. In examining those claims, the Court warned that the Flatow Amendment did not "'authorize federal courts to fashion a complete body of federal law'" to address the claims of plaintiffs under that statute. Id. (quoting Burks v. Lasker, 441 U.S. 471, 476 (1979)). Instead of relying on "federal common law," the Court looked to § 46 of the Restatement (Second) of Torts, as well as a number of secondary source compilations, such as legal encyclopedias, law reviews, and survey of leading state tort law cases. See id. at 333--338.
Admittedly, Bettis was decided under the Flatow Amendment, but this Court finds nonetheless that Bettis should still control now that Congress has clearly established a private right of action against a foreign state sponsor of terrorism for "personal injury or death" in those cases in which terrorism exception to foreign sovereign immunity applies. § 1605A(c). The questions confronted relating to sources of common law for claims sounding in tort under the Flatow Amendment, are, in substance, the same as those that will now confront this Court as result of the new private right of action in § 1605A(c). Thus, the question of what substantive tort law norms should control in these actions is an issue this Court will have to continue to explore in actions under § 1605A, as it once did in actions under the Flatow Amendment prior to Cicippio-Puleo.*fn20
As this Court views Bettis as the as the controlling precedent with respect to application of tort law principles to in cases under the FSIA terrorism exception, this Court will therefore look to that decision as the starting point for the analysis of substantive claims under § 1605A. Consistent with Bettis, this Court will rely on well-established principles of law, such as those found in Restatement (Second) of Torts and other leading treatises, as well as those principles that have been adopted by the majority of state jurisdictions. Today, this Court will issue a separate opinion in the consolidated action of Heiser v. Islamic Republic of Iran, No. 00-CV-23290-RCL (D.D.C.), a case concerning the Khobar Towers bombing, in which this Court analyzes new claims for compensatory damages under § 1605A. Plaintiffs looking for more guidance regarding the standards that this Court will apply to claims under § 1605A should review that decision in conjunction with this omnibus opinion.
The second key reform found in § 1605A is the availability of punitive damages. See § 1605A(c). Consequently, the majority of the of the plaintiffs in prior actions under § 1605(a)(7) who were unable to claim punitive damages following the Cicippio-Puleo decision will now have an opportunity to do so. The prospect of large punitive damage awards may help to deter Iran and other states sponsors of terrorism from their support of international terrorist organizations.
Through the separate opinion and judgment entered in Heiser, this Court awards plaintiffs in that action punitive damages under § 1605A(c)). In doing so, the Court reaffirms the principles first articulated in Flatow with respect to awards of punitive damages against Iran. Other plaintiffs who now seek punitive damages under § 1605A should review this Court's discussion of punitive damages in Flatow and look to the opinion issued today in Heiser.
3. Compensation for Special Masters
Over the years, a number of attorneys have been appointed by this Court to serve as special masters to assist the Court in determining money damage awards for the many individual plaintiffs and estates represented on this Court's sizable docket of civil actions against Iran. The work completed by these officers of the Court is extraordinarily tedious and time-consuming, and, until recently, the special masters were not entitled to any compensation for their efforts. In last year's NDAA, however, Congress directed that special masters in cases against designated states sponsors of terrorism should receive compensation for their work, and thus the new terrorism exception now provides that special masters should be reimbursed for their work from the Attorney General's Victims of Crime Fund. See § 1605A(e).
4. More Robust Provisions for the Execution of Civil Judgments
Like many prior legislative enactments relating to civil suits against designated state sponsors of terrorism, the new terrorism exception in combination with certain other reforms achieved through § 1083 takes aim at what is perhaps the most fundamental problem confronting these actions: the inability of plaintiffs to execute their civil judgments against Iran. As noted above, supra, most plaintiffs in FSIA terrorism cases have been thwarted in their efforts to execute civil judgments in part because there are few Iranian Government assets within the jurisdiction of the United States Courts. What little that does exist is generally immune from attachment or execution under § 1609. Additionally, in the past plaintiffs have encountered the problem of United States sovereign immunity because most property or interests in property within the United States that might be attributed to state sponsors of terrorism are subject to federal regulatory control, or are, in a number of instances, within the possession of the federal government. See, e.g., Weinstein, 274 F. Supp. 2d 53.
In an apparent effort to overcome some of the challenges relating to the execution of judgments, § 1605A entitles plaintiffs to what are in effect automatic pre-judgment liens on property belonging to a designated state sponsor of terrorism.*fn21 In addition to these new prejudgment attachment procedures, any actions filed or otherwise maintained under § 1605A may benefit from certain reforms to § 1610, which is the section of the FSIA that prescribes the limited circumstances in which the property of a foreign state may be subject to attachment or execution upon a civil judgment. Specifically, § 1083 of the 2008 NDAA adds to § 1610 new provisions that are plainly intended to limit the application of foreign sovereign immunity or United States sovereign immunity as defenses to attachment or execution with respect to property belonging to designated states sponsors of terrorism. See § 1083(b) ("Conforming Amendments") (codified at § 1610(g)). The full implications of § 1610(g) are far from clear. Only time will tell whether § 1610(g) will enable plaintiffs going forward with actions under § 1605A to experience greater success in executing civil judgments against Iranian assets. Given the scarcity of assets and the difficulty of locating what assets might be available-it seems unlikely that this provision will be of great utility to plaintiffs. Suffice it to note, however, these latest additions to the FSIA demonstrate that Congress remains focused on eliminating those barriers that have made it nearly impossible for plaintiffs in these actions to execute civil judgments against Iran or other state sponsors of terrorism.
C. RETROACTIVE APPLICATION OF SECTION 1605A TO CASES PREVIOUSLY FILED UNDER SECTION 1605(a)(7)
Today the Court must determine whether the new terrorism exception should be applied retroactively to reach cases that were originally filed under § 1605(a)(7) prior to enactment of the new statute, § 1605A. In this instance, Congress has in § 1083(c) of the 2008 NDAA provided guidance with respect to the retroactive reach of this new provision of law, and so the Court's analysis begins with that statutory guidance. See, e.g., Hamdan v. Rumsfeld, 548 U.S. 557, 575-- 584 (2006) (applying "ordinary principles of statutory construction" to determine whether the Detainee Treatment Act should operate retroactively); Landgraf, 511 U.S. at 271 (noting that when "Congress has expressly prescribed the statute's proper reach[,] there is no need to resort to judicial default rules"). Section § 1083 contains a number of subsections, but two are especially critical for purposes of this Court's analysis. These are subsections (c)(2) and (c)(3), which set forth the qualifying conditions and procedures that must be fulfilled before a prior action under § 1605(a)(7) may be eligible to proceed under the new terrorism law, § 1605A.
Subsection (c)(2) refers to "Prior Actions," but this subsection actually concerns a relatively narrow category of prior cases, all of which are probably best characterized as pending cases. Pending in this instance means cases that were awaiting a disposition by a court at the time of the 2008 NDAA's enactment. This includes actions that were on direct appeal and those with unresolved postjudgment motions.
The next subsection, (c)(3), referring to "Related Actions," reaches a far broader category of cases, including many that simply were not pending with the courts in any form at the time the 2008 NDAA became law. This is because the plain terms of the related-actions provisions in subsection (c)(3) specify that if an action was timely commenced under § 1605(a)(7), then "any other action arising out of the same act or incident may be brought under section 1605A" § 1083(c)(3) (emphasis added). Thus, the heading of § 1083(c)-"Application to Pending Cases"-is something of a misnomer because, in reality, § 1083(c) may encompass cases that are not pending at all-meaning prior actions that have since reached final judgment and are no longer before the courts in any form.
Additionally, there are two other aspects of § 1083(c) that are critical to today's analysis. First, the statute sets up limitation periods or filing deadlines for plaintiffs desiring to take advantage of the newly enacted terrorism statute. See § 1083(c)(2)(C), (c)(3). Second, in a section of the statute referred to as "Defense Waived," the enactment provides that the defenses of res judicata and collateral estoppel are waived to the extent that such defenses ...