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Estate of Doe v. Islamic Republic of Iran

United States District Court, District Circuit

May 9, 2013

ESTATE OF JOHN DOE, et al., Plaintiffs,
v.
ISLAMIC REPUBLIC OF IRAN, et al., Defendants.

MEMORANDUM OPINION

JOHN D. BATES, District Judge.

Shortly after 1 p.m. on April 18, 1983, an unidentified driver rammed a vehicle laden with more than a ton of explosives into the United States Embassy in Beirut, Lebanon. Sixty-three people perished and scores of others were injured in the resulting explosion. In the aftermath of the attack, the Embassy moved its operations to a new location, the Embassy Annex. On September 20, 1984, another bomb detonated at the Annex. At least eleven people were killed and over fifty others were injured. Many of the victims had themselves survived the 1983 bombing; most had family members and friends who had been injured or killed in the first attack.

The 1983 Embassy bombing was the first large-scale attack against a United States embassy anywhere in the world, and it marked the onset of decades of terrorism against the United States. See Dammarell v. Islamic Republic of Iran, No. 01-2224 , 2005 WL 756090, *1 (D.D.C. Mar. 29, 2005). Evidence emerging shortly after the attacks and mounting in the years since has shown that the attacks were carried out by the terrorist group Islamic Jihad, known most commonly as Hezbollah, operating with Iranian support and encouragement. Testifying in Dammarell, one of the related cases that support this action, expert Patrick Clawson explained that "there's no question that Iran was responsible for the selection of the target, provided much of the information for how to carry out the bombing, the expertise for how to build the bomb, the political direction that said that this was an important target to bomb, [and] provided financial support for the bombers.'" See Estate of Doe v. Islamic Republic of Iran , 808 F.Supp.2d 1, 8-9 (D.D.C. 2011) (quoting Ex. 17 (Tr. Vol. II at 20-21)). In an earlier ruling in this case, the Court found, consistent with several other cases in this district, that Iran and its Ministry of Information and Security ("MOIS") directed and facilitated the 1983 and 1984 attacks. See id. at 14-16.
Plaintiffs bring this case pursuant to the Foreign Sovereign Immunities Act ("FSIA"). A 1996 amendment to the FSIA revoked sovereign immunity protection for terrorist-sponsoring governments. Using this provision, the victims of such attacks have brought several mass-tort lawsuits against the Islamic Republic of Iran and its Ministry of Information and Security ("MOIS"). Although the waiver of sovereign immunity initially applied only where a victim or claimant was a United States citizen, see 28 U.S.C. § 1605(a)(7)(B)(ii) (2007) (repealed), a 2008 amendment to the FSIA has expanded jurisdiction to cases where the victims were foreign national employees of the United States government, killed or injured while acting within the scope of their employment. See National Defense Authorization Act for Fiscal Year 2008, § 1083, Pub. L. No. 110-181, 122 Stat. 3, 338 (codified at 28 U.S.C. § 1605A). Here, plaintiffs are one U.S. national and 58 foreign national employees of the U.S. Embassy killed or injured in either of the two attacks, and 255 immediate family members of the victims.
In a prior ruling in this case, the Court found that it has jurisdiction over Iran and other defendants and held that the U.S. government employees have a federal cause of action, while their family members may pursue their claims under District of Columbia law. The Court entered a final judgment of liability in favor of plaintiffs and referred plaintiffs' claims to Magistrate Judge John Facciola to prepare proposed findings and recommendations for a determination of damages. See Estate of Doe, 808 F.Supp.2d at 23-24.

After receiving evidence, Judge Facciola has filed a thorough 220-page Report & Recommendation. See Report and Recommendation [Docket Entry 105] (Apr. 30, 2013). The Report & Recommendation extensively describes the key facts relevant to each of the more than 300 plaintiffs' claims and carefully analyzes their claims under the framework established in prior mass tort cases related to terrorism. The Court commends Judge Facciola for his excellent work and thoughtful analysis. The Court will adopt the Report and Recommendation in substantial part, with a few adjustments as described below. As a result, the Court will award plaintiffs a total judgment in the amount of over $8.4 billion.

I. Prejudgment Interest

Magistrate Judge Facciola recommends an award of prejudgment interest. The Court agrees that an award of prejudgment interest at the prime rate is appropriate in this case. See Oldham v. Korean Air Lines Co., Ltd. , 127 F.3d 43, 54 (D.C. Cir. 1997); Forman v. Korean Air Lines Co., Ltd. , 84 F.3d 446, 450-51 (D.C. Cir. 1996).[1]

Unlike the Report & Recommendation, however, the Court will calculate the interest using the prime rate for each year rather than the average prime rate from 1984 to 2013. In Forman, the leading case to assess prejudgment interest, the D.C. Circuit explained that the prime rate-the rate banks charge for short-term unsecured loans to creditworthy customers-is the most appropriate measure of prejudgment interest, one "more appropriate" than more conservative measures such as the Treasury Bill rate, which represents the return on a risk-free loan. See 84 F.3d at 450 (emphasis omitted). In reaching this conclusion, the D.C. Circuit did not expressly consider the best measure of the prime rate, although it approved the "district court's award of prejudgment interest at the prime rate for each year between the accident and the entry of judgment." See id. at 450 (emphasis added).

Using the average prime rate over the entire period might well be a permissible estimate. Some courts have used the average prime rate for the relevant decade in calculating prejudgment interest. See Matter of Oil Spill by Amoco Cadiz Off Coast of France on March 16 , 1978, 954 F.2d 1279, 1335 (7th Cir. 1992) ("The French parties say that the average prime rate during the 1980s was 11.9%.... Because Amoco has not challenged the proposed rate of 11.9%, we adopt it."). But using the rate for each year is more precise. It measures how much the award would have grown between 1983 and 1984 using the 1984 interest rate, then measures how much that total would have grown between 1984 and 1985 using the 1985 interest rate, and so on. The difference is substantial where, as here, prime rates were vastly higher longer ago. Because prime rates in the 1980s and 1990s were several times higher than they are today, using the average rate for the whole period does not reflect the rapid initial growth of an amount received in 1983 or 1984, growth that itself would have been compounded. Just as the prime rate is a more accurate measure of the true cost to plaintiffs than is the more conservative Treasury Bill rate, employing the prime rate for each year is more accurate than using the average prime rate for the whole period. In this case, then, using the prime rate for each year offers a substantially more accurate "market-based estimate" of the costs a plaintiff incurred by being unable to use the owed amount in the pre-judgment period. See Forman , 84 F.3d at 451 (internal quotation marks omitted).

Although using the average prime rate might nonetheless be desirable where it would substantially simplify calculations, in this case using the prime rate for each year is both substantially more accurate and nearly as simple to calculate. Using the prime rate for each year results in a multiplier of 7.6418 for damages incurred in 1983 and a multiplier of 6.8206 for damages incurred in 1984.[2] Accordingly, the Court will use these multipliers to calculate prejudgment interest.

II. Economic Losses

In determining plaintiffs' economic losses, the Report & Recommendation relied on an expert report submitted by Steven Wolf. See Steven A. Wolf Report [Docket Entry 65] (Feb. 15, 2012). The Wolf report calculated economic loss figures by converting each deceased victim's expected stream of income into 2012 terms, using the Treasury Bill rate to compound losses before 2012 "to accommodate for the [e]ffect of the time value of money." See id. at 7. Because the figure is already in 2012 dollars, no further award of prejudgment interest is appropriate. See Oldham , 127 F.3d at 54 (holding that the district court did not abuse its discretion in awarding prejudgment interest only because the jury relied on calculations made in 1983 dollars rather than calculations made in 1993 dollars). Plaintiffs themselves recognize this, stating that "[b]ecause Plaintiffs' proposed economic damages for the victims' Estates already have been adjusted by Mr. Wolf to reflect present value, Plaintiffs seek prejudgment interest only on their damages against Defendants for personal injuries." See Pls.' Proposed Findings of Fact & Conclusions of Law [Docket Entry 89] at 363 n.319 (Aug. 31, 2012) ("Pls.' Proposed Findings"). The Court will therefore remove the award of prejudgment interest on economic loss amounts.

The Court will otherwise adopt Judge Facciola's recommendation as to economic losses. One aspect of this warrants further comment. The Wolf report declined to factor in payments families received from the United States government. The expert stated that "actual death benefits that may have been received by certain individuals' families was [sic] not reliably known and thus not deducted to mitigate the projected lost income due to incomplete information available." See Wolf Report at 6. The Report & Recommendation cites some record evidence of such payments, but also declines ...


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