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Kaplan v. Central Bank of the Islamic Republic of Iran

United States District Court, District of Columbia

August 20, 2013

CHAIM KAPLAN, et al., Plaintiffs,
v.
CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN, et al., Defendants

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[Copyrighted Material Omitted]

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For CHAIM KAPLAN, individually and as natural guardian of plaintiffs M.K.(1), A.L.K., M.K.(2), C.K. and E.K, ALL PLAINTIFFS, SHOSHANA SAPPIR, SARAH YEFET, ESTHER PINTO, IMMANUEL PENKER, JOSEPH MARIA, RIVKA EPON, VALENTINA DEMESH, TATIANA KOVLEYOV, AGAT KLEIN, RAPHAEL WEISS, RINA DAHAN, NITZAN GOLDENBERG, SHLOMO COHEN, TAL SHANI, YOSEF ZARONA, TATIANA KREMER, ARKADY GRAIPEL, TZVI HIRSH, YEHUDIT LICCI, individually and as natural guardian of plaintiff, Y.L., ELIHAV LICCI, individually and as natural guardian of plaintiff, Y.L., Y.L., a minor, by his father and natural guardian Elihav Licci and by his mother and natural guardian Yehudit Licci, MYRA MANDEL, DANIELLE SAUTER, JARED SAUTER, MIKIMI STEINBERG, CHAYA KATZMACHER, DEBORAH CHANA KATZMACHER, JACOB KATZMACHER, MAURINE GREENBERG, THEODORE GREENBERG, YAIR MOR, M.R., a minor, by her mother and natural guardian, Laurie Rappeport, LAURIE RAPPEPORT, individually and as natural guardian of plaintiff M.R., N.Y.A., a minor, by hisr father and natural guardian, Brian Ardstein, and by his mother and natural guardian, Keren Ardstein, A.C.A., a minor, by his father and natural guardian, Brian Ardstein, and by his mother and natural guardian, Keren Ardstein, N.A., a minor, by her father and natural guardian, Brian Ardstein, and by her mother and natural guardian, Keren Ardstein, Plaintiffs: Robert Joseph Tolchin, THE BERKMAN LAW OFFICE, LLC, Brooklyn, NY.

For RIVKA KAPLAN, individually and as natural guardian of plaintiffs M.K.(1), A.L.K., M.K.(2), C.K. and E.K, M.A., a minor, by her father and natural guardian, Brian Ardstein, and by her mother and natural guardian, Keren Ardstein, BRIAN ARDSTEIN, individually and as natural guardian of plaintiffs, M.A., A.C.A. and N.Y.A., KEREN ARDSTEIN, individually and as natural guardian of plaintiffs, M.A., A.C.A. and N.Y.A., NECHAMA KUMER, CHAYIM KUMER, ELISHEVA ARON, AVISHAI REUVANE, MICHAEL FUCHS, E.K., a minor, by his father and natural guardian, Chaim Kaplan, and by his mother and natural guardian, Rivka Kaplan, C.K., a minor, by her father and natural guardian, Chaim Kaplan, and by her mother and natural guardian, Rivka Kaplan, A.L.K., a minor, by his father and natural guardian, Chaim Kaplan, and by his mother and natural guardian, Rivka Kaplan, M.K.(2), a minor, by his father and natural guardian, Chaim Kaplan, and by his mother and natural guardian, Rivka Kaplan, M.K.(1), a minor, by her father and natural guardian, Chaim Kaplan, and by her mother and natural guardian, Rivka Kaplan, Plaintiffs: Robert Joseph Tolchin, LEAD ATTORNEY, THE BERKMAN LAW OFFICE, LLC, Brooklyn, NY.

For BANK SADERAT, IRAN, BANK SADERAT, PLC, Defendants: Frank C. Razzano, Matthew D. Foster, LEAD ATTORNEYS, John Charles Snodgrass, PEPPER HAMILTON LLP, Washington, DC; Jeremy D. Frey, LEAD ATTORNEY, PRO HAC VICE, PEPPER HAMILTON, LLP, Philadlephia, PA.

OPINION

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MEMORANDUM OPINION

Royce C. Lamberth, U.S. District Judge.

This action arises out of a series of rocket attacks by Hezbollah on civilians in Israel during a 34-day conflict in 2006 along the border between Israel and Lebanon. Some plaintiffs allegedly suffered injuries in these attacks, others claim to be the family members or personal representatives of the estates of victims. Defendants Bank Saderat Iran (" BSI" ) and Bank Saderat, PLC (" BSPLC" ) allegedly transmitted funds from defendant Iran to Hezbollah. They moved to dismiss the action. Defs.'s Mot. to Dismiss, Aug. 23, 2010, ECF No. 15. For the reasons given below, the Court will GRANT the motion and dismiss all claims against these two defendants and the associated John Does.[1]

I. BACKGROUND

A. Factual Background

1. The 2006 Conflict

Between July 12 and August 14, 2006, " Hezbollah fired thousands of rockets and missiles . . . at civilians in northern Israel." Compl. ¶ 56. Plaintiffs are American, Israeli, and Canadian civilians who allege that they suffered injuries caused by these rockets, or who allege that they are the family members or personal representatives of four Israeli civilians killed in these attacks. Id. ¶ ¶ 2, 4-11, 58-111.

In several public statements, Israeli leaders characterized these attacks as part of a " war" with Lebanon:

On July 12, 2006, describing actions carried out against Israeli Defense Forces on the Lebanese border, Prime Minister Olmert of Israel stated:
This morning's events were not a terrorist attack, but the action of a sovereign state that attacked Israel for no reason and without provocation. The Lebanese government, of which Hizbullah is a member, is trying to undermine regional stability. Lebanon is responsible and Lebanon will bear the consequences of its actions.
In response to the question--" is there cause to prepare the nation for war and will you call for an emergency government?" --Prime Minister Olmert responded:
One thing must be understood: This was an act of war without any provocation on the sovereign territory--about which there is no dispute--of the State of Israel. It is absolutely clear to the international community that Israel will respond and that it will respond in an unequivocal fashion that will cause those who started this act of war to bear a very painful and far-reaching responsibility for those actions.

Defs.' Mem. 4-5, ECF No. 15-1 (quoting Defs.' Ex. A, Remarks of Prime Minister Ehud Olmert at a Press Conference, Jul. 12, 2006, ECF No. 15-2, available http://www.mfa.gov.il/MFA/Government/Communiques/2006/PM㩙麮ⷦ�觾諏ꭺ쩨黈鮕鷟낊奾淦꯺�流➱穷ẳJul-2006.htm)

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(emphasis added); see also Defs.' Mem. 1 n.1, 4-6 (cataloguing Israeli governmental statements); Pls.' Opp'n 4-6, ECF No. 20 (acknowledging these statements). In addition, the Final Report of an Israeli governmental commission's investigation into the conflict concluded that " Israel initiated a long war, which ended without clear military victory." Defs.' Mem. 5 (quoting Winograd Commission Final Report ¶ 11, Jan. 30, 2008, Defs.' Ex. C, available at: http://www.cfr.org/publication/15385/winograd_commission_final_report.html, ECF No. 15-4) (emphasis added).[2]

The conflict seems to have begun when Hezbollah militants entered Israeli territory from Lebanon and kidnapped and killed several Israeli soldiers. See Defs.' Mem. 4 (quoting Israeli Prime Minister Olmert's July 12, 2006 response to " actions carried out against Israeli Defense Forces on the Lebanese border" ); see also Winograd Commission Final Report ¶ 13 (describing the Israeli government's decision " made in the night of July 12th to react (to the kidnapping) with immediate and substantive military action" ); Habchy v. Filip, 552 F.3d 911, 913 (8th Cir. 2009) (referring to the " the military conflict between Lebanon and Israel in July and August of 2006," and explaining that, according to a State Department report, " this conflict started when Hizballah militants entered Israel from Lebanese territory and kidnapped and killed three Israeli soldiers" and then " Israeli military forces entered Lebanese territory in response and instituted a bombing campaign" (emphases added)). As part of the conflict, the Israeli military invaded Lebanon. Defs.' Mem. 5. The United Nations brokered a cease fire, ending the conflict on August 14, 2006, id. at 5--a date which also marks the conclusion of the rocket attacks at issue in this matter. Defendant states that, during the course of this conflict, Israel lost 119 soldiers and 43 civilians, while between 250 and 500 Hezbollah members died, and more than 1,000 Lebanese civilians were killed. Defs.' Mem. 5.

2. Hezbollah

Hezbollah is both a terrorist organization and " a political party in Lebanon." Pls.' Opp'n 3; see also Defs.' Mem. 1 n.1, 4 & 7. Since its establishment in 1982, it has " been controlled, funded and operated by Iran," which has used it to carry out " thousands of terrorist attacks against American and Israeli targets, in which hundreds of innocent victims have been murdered and thousands more maimed."

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Compl. ¶ 29; see also id. ¶ ¶ 30-33 (detailing Hezbollah's terrorist activities).

3. Allegations that Defendants Funded Hezbollah

Plaintiffs allege that " [b]etween 2001 and 2006, the defendants herein [including BSI and BSPLC] provided Hezbollah with over $50 million in financial support . . . with the specific intent and purpose of facilitating, enabling and causing Hezbollah to carry out terrorist attacks against American and Israeli targets in order to advance Iran's Policy and Goals." Id. ¶ 35; see also id. ¶ 40 (alleging that defendants, including BSI and BSPLC, provided " massive financial support to Hezbollah, and thereby aided and abetted Hezbollah, all with the specific intention of causing and facilitating the commission of acts of extrajudicial killing and international terrorism" and did so " with actual knowledge that Hezbollah had killed and injured numerous U.S. and other civilians in terrorist attacks and with the knowledge and specific intent that additional U.S. and other innocent civilians would be killed and/or injured as a result . . . ." ). Specifically, plaintiffs claim that BSI received Iranian funds from defendant Central Bank of Iran (" CBI" ) transferred those funds to BSPLC in London who then transferred them to " accounts controlled by Hezbollah in branches of defendant BSI in Beirut, from which Hezbollah then withdrew these funds." Id. ¶ 36. In support of this account, plaintiffs point to an October, 2007 U.S. Treasury Department " Fact Sheet," which states that " from 2001 to 2006, Bank Saderat transferred $50 million from the Central Bank of Iran through its subsidiary in London to its branch in Beirut for the benefit of Hizballah fronts in Lebanon that support acts of violence." U.S. Department of the Treasury, Fact Sheet, Oct. 25, 2007, Pls.' Ex. A, ECF No. 3 (cited at Compl. ¶ 37).

4. The Defendants

Defendant Iran is a foreign state and has been continuously designated as a state-sponsor of terrorism pursuant to section 6(j) of the Export Administration Act of 1979, 50 U.S.C. § 2405(j) since 1984. Compl. ¶ 13.

Defendant CBI is the central bank of Iran, and is wholly owned by Iran. Compl. ¶ 14.

Defendant BSI is " an international financial institution headquartered in Iran." Defs.' Mem. 2. The Complaint states that Iran owns " over 90% of the shares" of BSI. Compl. ¶ 15. Defendants dispute this, insist that BSI is a " non-government-owned bank," and that the bank was privatized in 2009, leaving only 49% if its shares with the Iranian government. Defs.' Mem. 30-31.

Defendant BSPLC is " a bank incorporated in England and Wales and is a wholly owned subsidiary of BSI." Defs.' Mem. 3.

B. Procedural Background

Plaintiffs filed this action in 2010. In addition to BSI and BSPLC, plaintiffs also named as defendants the Islamic Republic of Iran and the Central Bank of Iran, as well as a host of " John Does." The complaint asserts the following four types of claims:

1. Foreign Sovereign Immunities Act's (" FSIA" ) state-sponsor of terrorism, 28 U.S.C. 1605A(c), claims by the American plaintiffs against Iran, CBI, and BSI (but not BSPLC), Compl. ¶ ¶ 117-26 (Counts I & II);
2. Anti-Terrorism Act (" ATA" ), 18 U.S.C. § 2333(a), claims by the American plaintiffs against BSPLC (but not BSI), Compl. ¶ ¶ 127-45 (Counts III & IV);

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3. Alien Tort Statute (" ATS" ), 28 U.S.C. § 1350, claims by the non-American plaintiffs against BSI and BSPLC, Compl. ¶ ¶ 146-153 (Count V); and
4. Israeli Tort claims by all plaintiffs against BSI and BSPLC, Compl. ¶ ¶ 154-73 (Counts VI & VII).

BSI and BSPLC filed the instant motion to dismiss in August of 2010. Defs.' Mot., ECF No. 15. The case was reassigned by consent from Judge Roberts to the undersigned in June 2013. ECF No. 38.

II. SUBJECT MATTER JURISDICTION

BSI and BSPLC challenge this Court's subject matter jurisdiction over the entire complaint on three grounds: political question, standing, and the Act of State doctrine.[3] See Defs.' Mem. 3-16; Defs.' Reply 3-5. This Court may advance to consider the merits only if it finds jurisdiction. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (rejecting the doctrine of " hypothetical jurisdiction" --whereby a court could skip over jurisdictional questions to consider the merits of a case--as " beyond the bounds of authorized judicial action" and stating that it " offends fundamental principles of separation of powers." ).

A. Plaintiffs' Claims Do Not Present a Non-Justiciable Political Question

BSI and BSPLC argue that the case presents a non-justiciable political question because, if the action proceeds, the Court " will have to decide whether the attacks complained of by plaintiffs were acts of war, as the Israeli government described them, or were instead acts of terrorism, as the complaint seeks to characterize them" --a determination that would risk interfering with American foreign policy. Defs.' Mem. 5, 3-10; see also Defs.' Reply 3-4. The Court rejects this argument.

In Baker v. Carr, the Supreme Court explained that a case should be dismissed as a non-justiciable political question if any one of the following six factors is present:

[1] a textually demonstrable constitutional commitment of the issue to a coordinate political department;
[2] . . . a lack of judicially discoverable and manageable standards for resolving it;
[3] . . . the impossibility of deciding without an initial policy determination of a kind clearly ...

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