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Harry Beer, et al v. Islamic Republic of Iran

May 19, 2011

HARRY BEER, ET AL., PLAINTIFFS,
v.
ISLAMIC REPUBLIC OF IRAN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Signed by Royce C. Lamberth, Chief Judge,

MEMORANDUM OPINION

I. INTRODUCTION AND BACKGROUND

This action arises out of the June 11, 2003 suicide bombing of a bus in Jerusalem, Israel by members of the terrorist organization Hamas.*fn1 The attack killed 17 individuals, including Alan Beer, a United States citizen living in Israel at the time. Plaintiffs, who include Mr. Beer's estate, his mother and his siblings, brought suit under the state-sponsored terrorism exception to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605A, alleging that defendants Islamic Republic of Iran ("Iran") and the Iranian Ministry of Information and Security ("MOIS") provided financial and material support to Hamas, and are thus liable for the death of Mr. Beer. They seek $150 million in compensatory damages and $300 million in punitive damages. Complaint 8, Oct. 17, 2008 [3]. The Court has already determined that defendants are "liable for the death of Alan Beer, which resulted from the tragic suicide bombing of Egged bus 14A in Jerusalem on June 11, 2003." Beer v. Islamic Republic of Iran, ___ F. Supp. 2d __, __, No. 08 Civ. 1807, 2010 U.S. Dist. LEXIS 129953, at * 43 (D.D.C. Dec. 9, 2010) ("Beer II").

This is not the first action brought by plaintiffs against these defendants. In Beer v. Islamic Republic of Iran, 574 F. Supp. 2d 1 (D.D.C. 2008) ("Beer I"), these same plaintiffs successfully pursued claims against Iran and MOIS under the former state-sponsored terrorism exception, which was codified at 28 U.S.C. § 1605(a)(7). In that case, this Court held that defendants were liable under state-law theories of wrongful death, infliction of conscious pain and suffering, and intentional infliction of emotional distress. Beer I, 574 F. Supp. 2d at 11--12. The Beer I Court awarded plaintiffs compensatory damages totaling $13 million, id. at 13--14, and denied plaintiffs' request for a punitive award. Id. at 14.*fn2

Because plaintiffs previously received compensatory damages, this Court has already rejected plaintiffs' request for such an award in this case, holding that [p]laintiffs who obtained compensatory damages from a suit brought pursuant to former § 1605(a)(7)-including those before the Court in this case-may not obtain additional compensatory relief as a remedy to the federal cause of action in § 1605A where that subsequent suit arises out of the same terrorist act.

Beer II, ___ F. Supp. 2d at __, 2010 U.S. Dist. LEXIS 129953 at *43--46. However, punitive damages are available under the current state-sponsored terrorism exception, 28 U.S.C. § 1605A(c), and thus plaintiffs may recover such damages here.*fn3 Though a procedure for the calculation of punitive damages is well-established in FSIA jurisprudence, the Court in Beer II expressed, for the first time, concern as to whether this traditional method remains appropriate in light of recent Supreme Court decisions calling for increased restraint and heightened review of punitive damages. ___ F. Supp. 2d at __, 2010 U.S. Dist. LEXIS 129953 at *46--53. After articulating these concerns, the Beer II Court announced that it would "await[] plaintiffs' view as to the appropriate punitive measures" in this case. Id. In response, plaintiffs submitted a brief in which they argue that "the amount of punitive damages requested . . . passes Constitutional muster," because defendants' conduct was "without a doubt highly reprehensible." Memorandum Regarding Punitive Damages 4, Jan. 10, 2011 [28] ("Ps.' Br."). Plaintiffs also emphasize that their request "is based on a specific methodology formulated by an expert . . . and adopted by this Court" that is "carefully designed to deter Iran from future misconduct." Id. at 5. For the reasons set forth below, the Court holds that the long-standing method for calculating punitive damages in terrorism-related suits under the FSIA should continue to govern suits under § 1605A, and awards punitive damages as appropriate under that framework.

II. LEGAL STANDARD

A. The Standard Method for Calculating Punitive Damages in FSIA Cases

When Congress passed the FSIA, it was clear that the state-sponsored terrorism exception rendered foreign states subject to suit in the United States for acts of terrorism. However, the original Act left several questions, including what sorts of damages were available to plaintiffs, unanswered. In re Islamic Republic of Iran Terrorism Litig., 659 F. Supp. 2d 31, 43 (D.D.C. 2009) ("In re Terrorism Litig."). In an effort to resolve these issues, Congress enacted Pub. L. 104-208, § 589, 110, 110 Stat. 3009-1, 3007-172 (1996) (codified at § 1605 note), which is commonly known as the "Flatow Amendment." This provision, among other things, specified that "money damages [in FSIA suits] may include economic damages, solatium, pain, and suffering, and punitive damages," id. (emphasis added), and thus provided the basis for the earliest judgments awarding punitive damages under the FSIA.

In Flatow v. Islamic Republic of Iran, 999 F. Supp. 1 (D.D.C. 1998), this Court issued the first opinion finding Iran liable under the state-sponsored terrorism exception. In re Terrorism Litig., 659 F. Supp. 2d at 44. That opinion included a substantial discussion on the best method for calculating punitive damages in state-sponsored terrorism cases. See generally Flatow, 999 F. Supp. at 32--34. Relying on "traditional principles of tort law and analogous opinions under the Alien Tort Claims Act . . . and the Torture Victim Protection Act . . . for guidance," id. at 32, this Court identified four factors relevant to the assessment of punitive damages: "(1) the nature of the [defendant's] act . . .; (2) the circumstances of its planning; (3) defendants' economic status with regard to the ability of defendants to pay; and (4) the basis upon which a court might determine the amount of an award reasonably sufficient to deter like conduct in the future." Id. at 33. The Court also received testimony from Dr. Patrick Clawson, a well-known expert on international terrorism and Iranian affairs,*fn4 who explained that Iran's annual expenditures on international terrorism were approximately $75 million and opined that "a factor of three times [Iran's] annual expenditure for terrorist activities would be the minimum amount which would affect the conduct of . . . Iran." Id. at 34. Drawing from the four-factor test and Dr. Clawson's expert testimony, the Flatow Court adopted a process for calculating punitive damages in which a FSIA court multiplies a defendant's financial support for international terrorism (then $75 million) by a pre-determined multiplier (generally between 3 and 5) (the "Flatow Method"). Id. This Court explained that the resulting award-$225 million in Flatow-best serves the societal interests in punishment and deterrence that warrant imposition of punitive sanctions. Id.

While a number of FSIA courts subsequently assessed punitive damages using the Flatow Method, such awards were brought to a screeching halt by the D.C. Circuit in Cicippio-Puleo v. Islamic Republic of Iran, in which it held that "neither section 1605(a)(7) nor the Flatow Amendment, separately or together, establishes a cause of action against foreign state sponsors of terrorism." 353 F.3d 1024, 1027 (D.C. Cir. 2004). The Cicippio-Puleo decision thus reduced the prior state-sponsored terrorism exception to a jurisdictional "pass-through" and forced future plaintiffs to look to other sources of law-primarily state tort law-to identify legal bases for their suits. See, e.g., Rimkus v. Islamic Republic of Iran, 575 F. Supp. 2d 181, 197--98 (D.D.C. 2008) (awarding damages for intentional infliction of emotional distress under Missouri law) ("Rimkus I"); Beer I, 574 F. Supp. 2d at 11--14 (awarding damages for wrongful death and conscious pain and suffering under Ohio law); Haim v. Islamic Republic of Iran, 425 F. Supp. 2d 56, 69--75 (D.D.C. 2006) (awarding damages for assault and battery under D.C. law). "Another consequence of the Cicippio-Puleo decision was that the Flatow Amendment could not serve as an independent basis for punitive damage awards" against foreign states. In re Terrorism Litig., 659 F. Supp. 2d at 48. Thus, while courts continued to award substantial compensatory relief to plaintiffs, they had to repeatedly deny those plaintiffs' requests for punitive damages. See, e.g., Rimkus I, 575 F. Supp. 2d at 198 ("As a general rule, punitive damages are not available against foreign states."); Beer I, 574 F. Supp. 2d at 14 (holding punitive damages unavailable under § 1605(a)(7)); Haim, 425 F. Supp. 2d at 71 (same).

In early 2008, Congress moved to reverse this trend through amendments to the FSIA enacted as part of the National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 1083, 122 Stat. 3. 338--44 (2008) ("NDAA"). These Amendments struck § 1605(a)(7) and replaced it with the current state-sponsored terrorism exception, which is codified at 28 U.S.C. § 1605A. Among numerous changes to the law, § 1605A now "provides for the recovery of punitive damages in suits based on acts of terrorism." Rimkus v. Islamic Republic of Iran, 750 F. Supp. 2d 163, 167 (D.D.C. 2010) (citing 28 U.S.C. § 1605A(c)). Over the past three years, FSIA courts have resumed awarding punitive damages pursuant to this statute-a trend aided by the NDAA's provision for retroactive application of § 1605A. See NDAA § 1083(c)(2)--(3) (permitting retroactive application of § 1605A to cases concluded under prior exception).

In awarding damages following passage of the NDAA, courts have generally identified the Flatow Method as the procedure that best serves the retribution and deterrence interests that Congress sought to promote in enacting the 2008 Amendments. See In re Terrorism Litig., 659 F. Supp. 2d at 61 (holding that, post-NDAA, courts "reaffirm[] the principles first articulated in Flatow with respect to awards of punitive damages" under FSIA). Just as it was prior to Cicippio-Puleo, current judicial assessments of punitive damages in state-sponsored terrorism cases involve two figures: the amount that a foreign state annually provides in support of terrorist activities, known as the multiplicand, and the multiplier that FSIA courts deem necessary to deter future conduct. As seen in one recent case: "[T]he Court chooses to take the mean of the range's two extremes ($50 million and $150 million) and multiply it ($100 million) by three. The result, as an award of $300 million, appears fitting." Heiser v. Islamic Republic of Iran, 659 F. Supp. 2d 20, 30 (D.D.C. 2009) ("Heiser II"); see also, e.g., Brewer v. Islamic Republic of Iran, 664 F. Supp. 2d 43, 58--59 (D.D.C. ...


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