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Flanagan v. Islamic Republic of Iran

United States District Court, District of Columbia

June 3, 2016

SAUNDRA FLANAGAN, et al., Plaintiffs,
v.
ISLAMIC REPUBLIC OF IRAN, et al., Defendants.

          MEMORANDUM OPINION RE DOCUMENT: 55

         Granting in Part and Denying in Part the Republic of Sudan’s Motion to Set Aside the Default Judgment

         I. INTRODUCTION

         Plaintiffs in this case are the family members of Electronic Warfare Technician First Class Kevin Shawn Rux, who was killed along with sixteen other American sailors in the 2000 terrorist bombing of the U.S.S. Cole in Yemen, carried out by Al-Qaeda. In 2010, Plaintiffs filed a lawsuit under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 et seq., against Syria, Iran, Sudan, and several of those foreign states’ agents and political subdivisions, alleging that those defendants provided material support to Al-Qaeda which caused the U.S.S. Cole bombing. Although they were served with process in January 2011, the Iranian and Sudanese defendants never appeared. The Clerk of Court entered default against those parties on October 31, 2012, and this Court held an evidentiary hearing on August 12, 2014, to determine whether Plaintiffs had "establishe[d] [their] claim or right to relief by evidence satisfactory to the court." 28 U.S.C. § 1608(e). The Court concluded that the Plaintiffs had and, on March 31, 2015, issued a lengthy opinion setting forth the Court’s Findings of Fact and Conclusions of Law. See generally Flanagan v. Islamic Republic of Iran, 87 F.Supp. 3d 93 (D.D.C. 2015). The Court awarded Plaintiffs $18, 750, 000.00 in compensatory damages and $56, 250, 000.00 in punitive damages.

         Two months later-and over four years after Sudan had been served with process- Sudan finally entered an appearance and filed a motion to set aside the default judgment. See Sudan’s Mot. to Set Aside Default J., ECF No. 55 [hereinafter "Sudan’s Mot."]. Sudan now raises several belated defenses which, it claims, establishes "good cause" under Federal Rule of Civil Procedure 55(c) to set aside the default judgment. Several of these arguments were recently considered by another judge in this district in seven related cases in which Sudan sought to set aside default judgments arising out of the 1998 bombings of the United States embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania. See Owens v. Republic of Sudan, --- F.Supp. 3d ----, No. 01-2244 et al., 2016 WL 1170919 (D.D.C. Mar. 23, 2016), appeal docketed, No. 16-7048 (D.C. Cir. Apr. 22, 2016). In many respects the Court finds the opinion in Owens instructive, and will rely on that decision’s analysis where persuasive and relevant. As explained below, the Court will grant in part and deny in part Sudan’s motion, and will vacate the portion of the default judgment awarding punitive damages, without definitively determining, at this stage, whether punitive damages are available to Plaintiffs in this case.

         II. FACTUAL BACKGROUND

         The Court made substantial Findings of Fact and Conclusions of Law when entering a default judgment against Iran and Sudan. See generally Flanagan, 87 F.Supp. 3d at 93-127. The Court assumes familiarity with its prior opinion and revisits only those facts and statutory provisions particularly relevant for present purposes.

         A. Statutory Background

         The FSIA "provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country." OBB Personenverkehr AG v. Sachs, 136 S.Ct. 390, 393 (2015) (quoting Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443 (1989)). The FSIA starts with a general presumption of immunity for foreign states. See, e.g., Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993); TMR Energy Ltd. v. State Prop. Fund of Ukr., 411 F.3d 296, 299 (D.C. Cir. 2005). That presumption of immunity controls unless one of several statutorily prescribed exceptions applies. See 28 U.S.C. § 1604 ("[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of [Title 28]."). Federal district courts’ jurisdiction over FSIA claims are similarly tied to the question of immunity: 28 U.S.C. § 1330(a) provides that district courts "shall have original jurisdiction . . . of any nonjury civil action against a foreign state" only insofar as the plaintiff asserts a claim for relief "with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of [Title 28] or under any applicable international agreement." 28 U.S.C. § 1330(a). As a result, this Court’s "[s]ubject matter jurisdiction is . . . intertwined with immunity, " Owens, 2016 WL 1170919, at *2, because "subject matter jurisdiction in any such action depends on the existence of one of the specified exceptions to foreign sovereign immunity, " Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 493 (1983).

         One of those exceptions, first enacted by Congress in 1996, is referred to as the "terrorism exception" to foreign sovereign immunity. See Antiterrorism and Effective Death Penalty Act of 1996, Pub. L. No. 104-132, § 221, 110 Stat. 1214, 1241-43. Although that exception was previously codified as one of the many exceptions to foreign sovereign immunity listed in 28 U.S.C. § 1605(a), see 28 U.S.C. § 1605(a)(7) (2006 ed.), in 2008 Congress amended the terrorism-related provisions as part of the National Defense Authorization Act, [1] see National Defense Authorization Act of 2008, Pub. L. No. 110-181, § 1083, 122 Stat. 3, 338-44. The immunity exception was recodified in section 1605A, which is entitled "Terrorism exception to the jurisdictional immunity of a foreign state." See 28 U.S.C. § 1605A. The exception is substantially similar to the prior version, and states that:

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case not otherwise covered by this chapter in which money damages are sought against a foreign state for personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources for such an act if such act or provision of material support or resources is engaged in by an official, employee, or agent of such foreign state while acting within the scope of his or her office, employment, or agency.

Id. § 1605A(a)(1). A claim may only be heard under section 1605A, however, if, among other requirements, the foreign state was "designated as a state sponsor of terrorism at the time the act described in paragraph (1) occurred, or was so designated as a result of such act." Id. § 1605A(a)(2)(A)(i)(I).

         Subsection (c) also created a federal private right of action against "[a] foreign state that is or was a state sponsor of terrorism" or "any official, employee, or agent of that foreign state" while acting in an official capacity. Id. § 1605A(c). Those foreign states or individuals may be liable to "a national of the United States, " or her "legal representative" (among other classes of individuals) "for personal injury or death caused by acts described in subsection (a)(1) [the immunity provision] . . ., for which the courts of the United States may maintain jurisdiction under this section for money damages." Id. A plaintiff suing under that provision may recover "economic damages, solatium, pain and suffering, and punitive damages." Id.

         B. Factual & Procedural Background

         In September 2010, Plaintiffs filed this lawsuit, invoking section 1605A(c)’s cause of action. See generally Compl., ECF No. 3. The plaintiffs are Kevin Rux’s mother ("Doe Victim A") and his four brothers ("Doe Victim B, " "Doe Victim C, " "Doe Victim D, " and "Doe Victim E"). See First Am. Compl. ¶¶ 4-8, ECF No. 18. Plaintiffs alleged that each of the Defendants, including Sudan and its agencies and instrumentalities, [2] provided material support to Al-Qaeda, "including but not limited to providing, financing, lodging, training, and safehouses" as a result of which Al-Qaeda "was able to plan and execute its attack against the U.S.S. Cole." Id. ¶¶ 79, 136. Plaintiffs sued the foreign states of Iran, Sudan, and Syria, as well as several agents and instrumentalities of each state, see Id. ¶¶ 9-15, and sought to recover under section 1605A for intentional infliction of emotional distress and loss of solatium, id. ¶¶ 134-44.

         The Clerk entered defaults against the Iranian and Sudanese defendants on October 31, 2012. See Clerk’s Entry of Default, ECF No. 26; Clerk’s Entry of Default, ECF No. 27. At that time-and to date-Plaintiffs claim that they have been unable to effectuate service of process against the Syrian defendants, and therefore elected to proceed only against the Iranian and Sudanese defendants. See Pls.’ Status Report, ECF No. 28; see also Pls.’ Status Report on the Syrian Defs., ECF No. 51. The FSIA prohibits an entry of a default judgment "unless the claimant establishes his claim or right to relief by evidence satisfactory to the court." 28 U.S.C. § 1608(e). Consequently, the Court held an evidentiary hearing regarding liability and damages on August 12, 2014, and accepted evidence in the form of live testimony, affidavits, and documentary evidence.[3] The Court also took judicial notice of the evidence presented in another case arising out of the U.S.S. Cole bombing, Rux v. Republic of Sudan, 495 F.Supp.2d 541 (E.D. Va. 2007). See Tr. of Evidentiary Hr’g at 11, ECF No. 40 [hereinafter "Hr’g Tr."]. Specific to the Sudanese defendants, the Court accepted expert testimony in the form of an affidavit and supporting documents from Lorenzo Vidino, PhD, a senior fellow at the Center for Security Studies in Zurich, Switzerland, see Pls.’ Ex. 1 (affidavit and exhibits) [hereinafter "Vidino Aff."], and live testimony from Dale L. Watson, a former Assistant Director of Counterterrorism for the Federal Bureau of Investigation, see Hr’g Tr. at 81:23-130:11.

         Following that evidentiary hearing, the Court issued its Findings of Fact and Conclusions of Law. Relying in large part on the expert testimony, the Court found that Hassan al Turabi, the head of the Sudanese political party the National Islamic Front, offered Osama Bin Laden and Al-Qaeda refuge in Sudan from 1991 until 1996, when Bin Laden was expelled from Sudan. See Flanagan, 87 F.Supp. 3d at 99. The Court also found that even after 1996, and in "[e]ach year from 1997 through 2000, Sudan continued to serve as a meeting place, safe haven, and training hub for Al-Qaeda and other terrorist groups." Id. The Court found that Sudan’s safe haven allowed the organization to "‘plan more freely.’" Id. at 101 (quoting Hr’g Tr. at 112:5-113:12 (testimony of Dale L. Watson)).

         Beyond providing a safe haven for Bin Laden and Al-Qaeda, generally, the Court found that Sudan had provided material support in three more concrete ways. First, Bin Laden had "established several joint business ventures with the Sudanese regime, " which he maintained "even after his expulsion from Sudan." Id. These business interests flourished and allowed Al-Qaeda "to funnel money for terrorist activities through Sudanese banks and Sudanese-based legitimate businesses, therefore overcoming the difficulties in transferring funds the group would have otherwise faced." Id. (quoting Vidino Aff. ¶ 35). Second, the Court found that Sudan had provided support for training, in part because Bin Laden had financed at least three terrorist training camps in Sudan and because the Sudanese had allowed his organization to operate freely in the country. Id. at 102. Finally, the Court found that Sudan had facilitated Bin Laden’s and Al-Qaeda’s travel by providing its members with Sudanese travel documentation and passports, avoiding stamping non-Sudanese passports with a stamp from Sudan (which "would have raised the attention of immigration officials in other countries"), and exempted Al-Qaeda and its members from paying taxes or import duties (which permitted the organization to bring containers into Sudan without inspection). Id. (quoting Vidino Aff. ¶ 42) (internal quotation mark omitted). Ultimately, the Court concluded that "Bin Laden and Al-Qaeda would not have been able to carry out the attack on the Cole without the support of the Sudanese defendants, " id. at 103, because Sudan’s material support "was indispensable" for Al-Qaeda "not just to survive but also to then develop the expertise, technical knowledge and wide network of contacts that allowed it to flourish as a terrorist organization and carry out the USS Cole bombing, " id. at 103 (quoting Vidino Aff. ¶ 81).

         Based on Plaintiffs’ allegations and the evidence provided, the Court concluded that it could assert jurisdiction over Sudan and Iran because Plaintiffs sought money damages "for an extrajudicial killing that was caused by the provision of material support or resources (financial support, support for training, and facilitation of travel) to Bin Laden and Al-Qaeda." Flanagan, 87 F.Supp. 3d at 113. The Court similarly found that Plaintiffs had established, "with evidence satisfactory to the Court, " that Sudan and Iran, "through the provision of material support and resources . . . facilitated the planning and execution of the attack on the Cole, which resulted in the extrajudicial killing of Kevin Rux." Id. at 115. Consistent with the Court’s Findings of Fact and Conclusions of Law, the Clerk entered a judgment for Plaintiffs against the Iranian and Sudanese defendants, awarding Plaintiffs an aggregate of $18, 750, 000.00 in compensatory damages and $56, 250, 000.00 in punitive damages. See Am. Judgment, ECF No. 50.

         Nearly two months later-and over four years after being served with a copy of the summons and complaint in this case-Sudan belatedly appeared in this action. Sudan has now filed a motion to vacate the default judgment.[4]

         III. ANALYSIS

         As a threshold matter, the Court must determine whether Rule 55’s "good cause" standard or the more stringent requirements of Rule 60 govern the Court’s consideration of Sudan’s motion. Although the resolution of this issue is somewhat uncertain, particularly in the FSIA context, the Court ultimately concludes that Sudan has the better argument and that Rule 55(c) applies here. The Court then proceeds to apply that test. Although the Court rejects the bulk of Sudan’s motion, the Court will grant Sudan’s motion with respect to the punitive damages award.

         A. Whether Rule 60 or Rule 55 Applies

         The parties first dispute whether the Court should consider Sudan’s motion under Federal Rule of Civil Procedure 60(b) or Rule 55(c). Plaintiffs argue that the standard under Rule 60(b) for setting aside a final judgment applies, while Sudan contends that Rule 55(c)’s "good cause" standard applies.

         Under Rule 55(c), a defendant’s default may be set aside for "good cause." See Fed. R. Civ. P. 55(c). Although that rule speaks only of a defendant’s default, "even after a judgment is entered . . . the rule 55(c) standard should apply unless the default judgment is final and appealable." Jackson v. Beech, 636 F.2d 831, 836 n.7 (D.C. Cir. 1980). A district court exercising its discretion to set aside an entry of default or a non-final default judgment must consider, and balance: "whether (1) the default was willful, (2) a set-aside would prejudice plaintiff, and (3) the alleged defense [is] meritorious." Keegel v. Key W. & Caribbean Trading Co., 627 F.2d 372, 373 (D.C. Cir. 1980); see Mohamad v. Rajoub, 634 F.3d 604, 606 (D.C. Cir. 2011). When determining whether a defendant’s proffered defense is meritorious, the "[l]ikelihood of success is not the measure." Keegel, 627 F.2d at 374. Instead, a defendant’s "allegations are meritorious if they contain ‘even a hint of a suggestion’ which, [if] proven at trial, would constitute a complete defense." Id.

         A final default judgment, by contrast, can be set aside only under the more stringent standard of Rule 60(b). See Fed. R. Civ. P. 60(b); Fed.R.Civ.P. 55(c) ("The court . . . may set aside a final default judgment under Rule 60(b)."); accord Jackson, 636 F.2d at 835. Rule 60(b) states that a district court "may relieve a party . . . from a final judgment" in six identified circumstances, including where there has been "mistake, inadvertence, surprise, or excusable neglect, " where "the judgment is void, " or if the court identifies "any other reason that justifies relief." Fed.R.Civ.P. 60(b)(1)-(6). The standard is a more rigorous one because it more deeply implicates issues of finality even though, under certain prongs, a court must consider some of the same factors as under Rule 55. See Jackson, 636 F.2d at 835; Int’l Painters & Allied Trades Union & Indus. Pension Fund v. H.W. Ellis Painting Co., 288 F.Supp.2d 22, 26 (D.D.C. 2003); see also Shatsky v. Syrian Arab Republic, 795 F.Supp.2d 79, 82 (D.D.C. 2011) ("The Rule 55(c) standard is notably less strict than the standard for vacating a default judgment under Rule 60(b).").

         The largest hurdle for a defendant seeking to set aside a default judgment under Rule 60(b) is that a defendant is, for the most part, foreclosed from challenging the underlying merits of the plaintiff’s claims. For example, the Supreme Court has held that a judgment is not void under Rule 60(b)(4) "‘simply because it is or may have been erroneous’"; instead, the judgment must be "so affected by a fundamental infirmity that the infirmity may be raised even after the judgment becomes final." United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010) (quoting Hoult v. Hoult, 57 F.3d 1, 6 (1st Cir. 1995)). The D.C. Circuit has likewise explained- in the FSIA context, no less-that a defendant who fails to appear may assert a jurisdictional objection under Rule 60(b). Practical Concepts, Inc. v. Republic of Bolivia, 811 F.2d 1543, 1547 (D.C. Cir. 1987). But, as a consequence of his default, the defendant "ordinarily forfeits his right to defend on the merits, " and if he "loses on the jurisdictional issue . . . his day in court is normally over." Id.

         Sudan argues that the more lenient Rule 55(c) "good cause" standard applies here because the default judgment entered against it is not final and appealable, as it did not "adjudicate all claims of all parties, namely those against Defendant Syrian Arab Republic and the Agencies and Instrumentalities of the Syrian Arab Republic." Sudan’s Mot. at 4. Federal Rule of Civil Procedure 54(b) instructs that, typically, an order or decision that adjudicates the liabilities of fewer than all parties "does not end the action as to any of the claims or parties." Fed.R.Civ.P. 54(b) (emphasis added). Here, although the Plaintiffs named Syria and several of its agents and instrumentalities as defendants, Plaintiffs claim that they have been unable to serve those parties to date. See Pls.’ Status Report on Service of Process Upon the Syrian Defs., ECF No. 64; Pls.’ Status Report on the Syrian Defs., ECF No. 51; Pls.’ Status Report, ECF No. 28; Pls.’ Status Report, ECF No. 25; Pls.’ Status Report on Service of Process, ECF No. 23; Pls.’ Status Report on Service of Process, ECF No. 22.

         In response, Plaintiffs point to an exception that the D.C. Circuit has recognized for unserved defendants. As the Circuit has explained, "defendants that have not been subject to effective service are not ‘parties’ within the meaning of Rule 54(b)." Cambridge Holdings Grp., Inc. v. Fed. Ins. Co., 489 F.3d 1356, 1360 (D.C. Cir. 2007); see 15A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 3914.7, at 553-54 (2d ed. 1992) ("It is widely agreed that defendants who have not been served with process are not counted; a disposition as to all those who have been served is final."). In such circumstances, "a district court order disposing of all claims against all properly served defendants satisfies the requirements of Rule 54(b), even if claims against those not properly served remain unresolved." Cambridge Holdings Grp., 489 F.3d at 1360-61. Plaintiffs urge that because the judgment entered against Iran and Sudan resolved the claims against all defendants who had been served, the Court’s judgment was final and appealable when entered, and Sudan must now meet the Rule 60(b) standard to set that judgment aside.

         At first blush, then, it would seem that Rule 60(b) continues to apply. In its Reply, however, Sudan raises two grounds for concluding otherwise. See Sudan’s Reply at 1-4, ECF No. 61.

         First, Sudan claims that "unbeknownst to Plaintiffs, they have in fact effectuated service against the Syrian Defendants." Id. at 1. Specifically, they note that Plaintiffs attempted to serve Syria under 28 U.S.C. § 1608(a)(3), which provides for service "by sending a copy of the summons and complaint . . ., by any form of mail requiring a signed receipt, . . . to the head of the ministry of foreign affairs of the foreign state concerned." 28 U.S.C. § 1608(a)(3). Sudan notes that when Plaintiffs thereafter requested that the Clerk provide documents to the State Department for diplomatic service under section 1608(a)(4), Plaintiffs attached notifications from DHL which state that the "Recipient refused delivery" of the Syria documents. See ECF No. 19, Ex. A. Sudan cites several cases for the proposition that, when a defendant has refused delivery of the summons, service has nevertheless been effectuated and personal jurisdiction has been acquired. See, e.g., Nikwei v. Ross Sch. of Aviation, Inc., 822 F.2d 939, 945 (10th Cir. 1987) (citing cases and explaining that "courts view service by registered or certified mail as being complete when such is refused though the act of the defendant").

         The Court rejects this contention. For one thing, the statute is silent on whether a refused mailing is sufficient to effectuate service under the FSIA. Whatever the applicability of the principle that refused service is effective service in a typical case, the Court is reticent to read one into the FSIA context. The Supreme Court has cautioned that, because "foreign sovereign immunity is a matter of grace and comity rather than a constitutional requirement, " it has "‘consistently . . . deferred to the decisions of the political branches . . . on whether to take jurisdiction’ over particular actions against foreign sovereigns and their instrumentalities." Republic of Austria v. Altmann, 541 U.S. 677, 689 (2004) (first omission in original) (quoting Verlinden, 461 U.S. at 486). In part out of this deference in the delicate area of international affairs, courts have held that, "[w]hen serving a foreign sovereign, ‘strict adherence to the terms of 1608(a) is required.’" Barot v. Embassy of the Republic of Zambia, 785 F.3d 26, 27 (D.C. Cir. 2015) (quoting Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 154 (D.C. Cir. 1994)). Indeed, the D.C. Circuit has noted that, although actual notice may suffice for service of a foreign state’s agent under section 1608(b), nothing in the statute indicates that Congress was similarly "concerned with substance rather than form" when codifying the requirements for service on a foreign state or its political subdivisions under section 1608(a). See Transaero, 30 F.3d at 154. To the contrary, the circuit concluded that section 1608(a) mandated service on a foreign state’s Ministry of Foreign Affairs, "the department most likely to understand American procedure." Id. Thus, "neither substantial compliance, nor actual notice" suffices under section 1608(a)(3). Barot, 785 F.3d at 27. In light of these concerns, the Court thinks it unlikely that Congress intended a United States court’s exercise of jurisdiction over a foreign sovereign to rise and fall on whether a low-level employee at the Ministry of Foreign Affairs accepted the summons and complaint. Cf. Fed. R. Civ. P. 4 advisory committee’s note to 1993 amendment (explaining that the United States government is "not expected to waive service for the reason that its mail receiving facilities are inadequate to assure that the notice is actually received by the correct person in the Department of Justice, " and noting that the same principle applies to "other governments, " including foreign governments, subject to service under Rule 4(j)).

         Furthermore, Sudan has pointed to no case applying this principle in the FSIA context. In fact, the weight of authority cuts decisively against Sudan. There exist at least half a dozen cases in which courts note that service under section 1608(a)(3) was ineffective precisely because service was refused. See Ben-Rafael v. Islamic Republic of Iran, 540 F.Supp.2d 39, 52 (D.D.C. 2008) (noting that service under section 1608(a)(3) was "not possible here" because "[p]laintiffs attempted service on August 18, 2006, under § 1608(a)(3), but the recipients refused delivery on August 26, 2006, and the package was returned"); Opati v. Republic of Sudan, 978 F.Supp.2d 65, 67 (D.D.C. 2013) (explaining that "Plaintiffs were unsuccessful in effecting service under section 1608(a)(3)" because "[e]ach mailing was refused by the defendants, and the summonses returned unexecuted"); see also, e.g., Murphy v. Islamic Republic of Iran, 740 F.Supp.2d 51, 67 (D.D.C. 2010); Valore v. Islamic Republic of Iran, 700 F.Supp.2d 52, 70 (D.D.C. 2010); Nikbin v. Islamic Republic of Iran, 471 F.Supp.2d 53, 60 (D.D.C. 2007); Doe v. Holy See, No. 13-128, 2014 WL 3909136, at *3 (E.D. La. Aug. 11, 2014).

         Although these cases do not explicitly discuss the issue, in each case the court noted that service was effectuated only after the Secretary of State served the defendant through diplomatic channels pursuant to section 1608(a)(4). See, e.g., Valore, 700 F.Supp.2d at 70 (noting that, after "service was refused" under § 1608(a)(3), plaintiffs requested that "the Secretary of State transmit[] one copy of the documents to Iran via a diplomatic note though the Embassy of the Swiss Confederation while returning the other copy to the clerk, " and therefore that plaintiffs had "properly served defendants under § 1608(a)(4)"); Nikbin, 471 F.Supp.2d at 60 ("The Ministry refused these documents. . . . Having failed to complete service against the Iranian sovereign defendants through the preferred method, Nikbin resorted to the procedures described in § 1608(a)(4)."). Because section 1608(a)(4) specifically provides that diplomatic service may only be used if "service cannot be made within 30 days under paragraph (3), " 28 U.S.C. § 1608(a)(4), these cases imply that each court believed the refused-service was ineffective. Furthermore, the State Department advises in a circular that it "will not accept a request for service under Section 1608(a)(4) if the other methods for service in Section 1608(a) have not been exhausted." Foreign Sovereign Immunities Act, U.S. Dep’t of State, Bureau of Consular Affairs, https://travel.state.gov/content/travel/en/legal-considerations/judicial/service-of-process/foreign-sovereign-immunities-act.html (last visited June 2, 2016). Thus, it would be exceedingly odd if the State Department was regularly using its limited resources to serve defendants in FSIA cases where those defendants had already been effectively served-and acting contrary to the statute and its own guidance.

         In the face of this implicit authority-and absent any contrary indication in the statute- the Court believes it unlikely that Congress envisioned service would be accomplished under section 1608(a)(3), and personal jurisdiction would attach over a foreign state, when service is returned as refused. See Cambridge Holdings Grp., 489 F.3d at 1361 ("[U]nless the procedural requirements of effective service of process have been satisfied, the court lacks personal jurisdiction to act with respect to that defendant at all."). In such circumstances it is, at best, a tenuous assumption that the relevant foreign official even has actual notice of the lawsuit.

         Accordingly, the Court finds that Syria remains unserved, and turns to Sudan’s second contention. Sudan highlights a footnote in the D.C. Circuit’s decision in Cambridge in which the court noted that it took "no position" on a limitation the Ninth Circuit has added to the rule that an unserved defendant should be discounted for finality purposes. 489 F.3d at 1360 n.2. In that footnote, the D.C. Circuit explained that the Ninth Circuit has "qualified the other circuits’ approach by holding that an order disposing of all claims only against served parties is not final if ‘it is clear from the course of proceedings that further adjudication is contemplated’ by the district court." Id. (quoting Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 871-72 (9th Cir. 2004)). As evidence that additional proceedings are anticipated in this case, Sudan points to the Plaintiffs’ express intention to reserve their claims against Syria until they are able to properly serve them in the future.[5] See Sudan’s Reply at 2; see also Pls.’ Status Report on the Syrian Defs. ¶ 4, ECF No. 51 ("[P]laintiffs respectfully request that this Court hold plaintiffs’ claims against the Syrian defendants in abeyance until service of process is achieved."). Recently, Plaintiffs advised the Court that the State Department is now accepting documents for service through the Government of the Czech Republic, and Plaintiffs represent that they are in the process of resubmitting the requisite service documents to the State Department. See Pls.’ Status Report on Service of Process Upon the Syrian Defs. ¶ 5, ECF No. 64.

         With misgivings-and without the guidance of any on-point authority discussing unserved defendants in the FSIA context-the Court finds that Sudan’s argument controls.

         While the D.C. Circuit did not expressly endorse that exception in Cambridge, it did rest its interpretation of Rule 54(b) on the fact that a court’s "failure to dispose of a claim against a served party renders an order unappealable because such a claim will necessarily involve further action by the parties or the district court." 489 F.3d at 1361 (emphasis added). The circuit contrasted that situation with those circumstances in which "only an unserved defendant remains" because, in the latter circumstance, "there is generally no reason to anticipate additional proceedings before the district court."[6] Id. Thus, the circuit’s interpretation of Rule 54(b) depended, in some respect, on distinguishing between cases in which a case has been completed at the district court level and those in which future action is anticipated. And, in the absence of D.C. Circuit precedent, the Ninth Circuit’s is instructive. In the limited number of cases applying the exception for future proceedings, that circuit has asked whether there is a possibility of future service on the unserved defendants. See Disabled Rights, 375 F.3d at 871 (finding that additional proceedings were anticipated in part because the plaintiff was "free to serve" the remaining defendant "if it wished to do so, " and had informed the district court that it planned to do so); accord Martinez v. Aero Caribbean, 577 F. App’x 682, 683 (9th Cir. 2014) (relying on the fact that Disabled Rights had noted that plaintiffs remained free to serve the unserved defendants, and finding that a judgment was not final because plaintiffs continued attempting to, and later succeeded in, serving the unserved defendants). In this case, there is every indication that additional proceedings before the district court will be forthcoming. Plaintiffs have plainly told the Court as much. As a result, the Court’s default judgment was not final because it did not dispose of Plaintiffs’ claims against Syria, a party against whom future proceedings are contemplated.

         At the same time, the Court notes that it may well be appropriate to apply a different rule in the FSIA context. It is well established that "the requirement of finality is to be given a ‘practical rather than a technical construction.’" Gillespie v. U.S. Steel Corp., 379 U.S. 148, 152 (1964) (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949)); accord United States v. Legal Servs. for N.Y.C., 249 F.3d 1077, 1081 (D.C. Cir. 2001) ("The considerations we employ to evaluate finality are more practical than technical and do not require that the order appealed be the last order possible in the matter."). Under Federal Rule of Civil Procedure 4(m), a party typically has only ninety days[7] to serve a defendant, although that time period can be extended for good cause. See Fed. R. Civ. P. 4(m). Thus, in many cases, it may be that by the time the court has entered final judgment as to all served defendants, service on the unserved defendants would be untimely. In those circumstances, the court’s judgment as to all served defendants "‘effectively terminates’ the plaintiff’s litigation." Manley v. City of Chicago, 236 F.3d 392, 395 (7th Cir. 2001) (quoting United States v. 8136 S. Dobson St., Chicago, Ill., 125 F.3d 1076, 1081 (7th Cir. 1997)) (applying Seventh Circuit rule that the presence of a unserved defendant does not defeat finality when a plaintiff’s attempt to serve an unserved defendant would remain timely under Rule 4(m)).

         But because service on a foreign state is expressly exempted from Rule 4(m)’s time limit, see Fed. R. Civ. P. 4(m) ("This subdivision (m) does not apply to service in a foreign country under Rule 4(f) or 4(j)(1)."), it is more likely in a FSIA case that a plaintiff will retain the option of serving an unserved defendant by the time a default judgment is entered, or even thereafter. And because default judgments appear to be a frequent phenomenon in FSIA cases- particularly those seeking to waive immunity under § 1605A(a)(1)-this temporal reality has practical consequences for FSIA plaintiffs and defendants alike. For plaintiffs, whether Rule 55(c) or Rule 60 applies, and therefore the ease with which a foreign state who has defaulted (even willfully) may set aside the default judgment, will on occasion depend on the fortuitous and somewhat arbitrary fact that the plaintiffs have named a foreign co-defendant against whom they are unable to effectuate service for a period of time. Unlike many situations in which a plaintiff fails to serve a defendant under Rule 4, the plaintiff’s ability (or inability) to serve a foreign state may be out of her control. See Pls.’ Status Report ¶ 1, ECF No. 23 (explaining that the State Department informed Plaintiffs that, "due to the ‘deteriorating security situation’ in Syria, Poland, the United States’ protecting power in Syria, has suspended its embassy operations there").

         The difference may also be outcome determinative: as the Court indicates below, it would rule against Sudan on all fronts if Rule 60(b) applies, see infra notes 21 & 27, and another court has rejected the same argument on which Sudan succeeds here, largely because that court applied Rule 60(b), see Owens, 2016 WL 1170919, at *34 (rejecting Sudan’s argument that the punitive damages awards should be vacated because Sudan "completely failed to explain why" those claims of "nonjurisdictional legal error, " "even if persuasive, come within the ambit of Rule 60(b)(6)"). For defendants, on the other hand, the ability to immediately appeal a FSIA judgment is implicated. Indeed, there is considerable irony in that fact that, under Sudan’s preferred rule, a foreign state that does appear and defend on the merits will be precluded from appealing any adverse decision so long as an unserved foreign state remains in the case, unless the district court issues a Rule 54(b) certification. See Fed. R. Civ. P. 54(b) (". . . [T]he court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.").

         These practical realities may lead one to question whether a court should consider the possibility of future adjudication as heavily in a FSIA case. Nevertheless, the Court at present will adhere to the spirit of the D.C. Circuit’s logic in Cambridge. Plaintiffs indicate that they plan to serve the Syrian defendants when diplomatic service under section 1608(a)(4) becomes possible, and now represent that they are in the process of seeking such service; future action in this case is therefore likely, and the Court’s default judgment against Iran and Syria was not final and appealable.[8] As a result, the Court will procced to consider whether Sudan has shown "good cause" to set aside the default judgment, balancing "whether (1) the default was willful, (2) a set-aside would prejudice plaintiff, and (3) the alleged defense [is] meritorious." Keegel, 627 F.2d at 373.

         B. The Willfulness of Sudan’s Default

         The Court first considers whether Sudan’s default was willful. "The boundary of willfulness lies somewhere between a case involving a negligent filing error, which is normally considered an excusable failure to respond, and a deliberate decision to default, which is generally not excusable." Int’l Painters, 288 F.Supp.2d at 26. Sudan presents two basic arguments for why its default should be excused as not willful: it claims (1) that it was preoccupied by civil unrest and political turmoil at home and (2) that it lacked an understanding of the United States litigation process and the gravity of the consequences that might follow from its failure to appear. See Sudan’s Mot. at 27-28. Yet, Sudan was absent from this action for an exorbitant period of time. Coupled with Sudan’s history of litigating, and abandoning, other FSIA actions against it, the record paints a decidedly different picture. As a result, the Court concludes that Sudan’s default in this case constituted a "deliberate decision to default." Int’l Painters, 288 F.Supp.2d at 26.

         First, Sudan has identified no case in which a court found a defendant’s default not willful after the defendant was absent for such a lengthy period of time. Service was effectuated on Sudan on January 30, 2011. See Return of Service Aff., ECF No. 15. For over four years Plaintiffs’ case continued apace. The Clerk entered default against Sudan on October 31, 2012. See ECF No. 27. The Court then held an evidentiary hearing on August 12, 2014, three-and-a-half years after Sudan was served, and issued a lengthy opinion on March 31, 2015. Only after two more months had elapsed did Sudan finally appear and file the present motion. This time period is not comparable to those that were excused in the cases Sudan cites-in many of which the court, in any event, found the defendant’s default willful but set aside the entry of default for other reasons. See, e.g., Shatsky, 795 F.Supp.2d at 81-82 (finding default willful, but nevertheless setting aside default, when motion was filed two and a half years after default was entered, but before a default judgment was entered); Gilmore v. Palestinian Interim Self-Gov’t Auth., 675 F.Supp.2d 104, 108-09 (D.D.C. 2009) (finding default willful, but nevertheless setting aside default, where defendants filed a motion to vacate the Clerk’s entry of default six months after default was entered); Biton v. Palestinian Interim Self Gov’t Auth., 233 F.Supp.2d 31, 32-33 (D.D.C. 2002) (resolving "doubt" in favor of defendants, and finding default not willful, where defendants filed a motion to set aside default "shortly after" Clerk’s entry of default, and within five months of when plaintiffs had filed a second amended complaint). Simply put, the Court finds the length of Sudan’s absence from this case different in kind. Cf. Owens, 2016 WL 1170919, at *7 (finding Sudan’s conduct did not constitute excusable neglect under Rule 60(b) where Sudan "was absent from this litigation for just over four years, and it was only after nearly five years that Sudan filed the first of these motions to vacate" (emphasis in original)).

         Second, Sudan’s explanation that it was preoccupied by troubles at home is unpersuasive. Sudan has provided a declaration from its ambassador to the United States, Ambassador Maowia O. Khalid, which explains that its failure to appear was "principally during periods of well-known civil unrest and political turmoil in Sudan, in addition to times of natural disaster." Decl. of Ambassador Maowia O. Khalid ¶ 4, ECF No. 55-2 [hereinafter "Khalid Decl."]. In addition, Ambassador Khalid asserts that "the cession of [S]outh Sudan and the attendant and protracted diplomatic moves and negotiations completely pre-occupied the Government of Sudan and necessitated the diversion of all meager legal and diplomatic personnel to that process." Id. Courts have considered whether domestic circumstances hindered a foreign state’s ability to respond in a timely manner, and have held in foreign states’ favor when the failure to file a response "was in considerable measure out of the [foreign state]’s control." FG Hemisphere Assocs., LLC v. Democratic Republic of Congo, 447 F.3d 835, 840 (D.C. Cir. 2006). Yet, even absolving Sudan of any responsibility for its domestic turmoil, [9] nothing in the record indicates that Sudan attempted, but was unable, to converse with attorneys, its counsel, or the Court, during this extended period of time. Cf. Id. at 841 (noting that the Democratic Republic of the Congo was "hampered by its devastating civil war, " which was "accompanied by substantial confusion over responsibilities in the Foreign Ministry" and which explained defendants’ two-month delay in responding to plaintiffs’ motion). Nor does Sudan argue that it was unaware of this lawsuit (which, given the fact that service was effectuated in January 2011, would be difficult). At most, Sudan’s memorandum and the affidavit of its ambassador indicate that Sudan was preoccupied with pressing domestic matters and, thus, affirmatively chose to deprioritize its response in this case. The domestic realities Sudan faced may have been a reason to seek an extension of Sudan’s filing deadlines, or a stay of this case. See Owens, 2016 WL 1170919, at *8. But, without more, they do not absolve Sudan from its decision to wholly abdicate any defense in this case for a period of several years. Id. ("The idea that the relevant Sudanese officials could not find the opportunity over a period of years to send so much as a single letter or email communicating Sudan’s desire but inability to participate in these cases is, quite literally, incredible." (emphasis in original)).

         Finally, the Court also finds unavailing Sudan’s claims that it had "a fundamental lack of understanding . . . about the litigation process in the United States, in particular surrounding the limits of foreign sovereign immunity and developments in that area of law, " and that it "failed to appreciate the gravity of the potential consequence of its absence." Khalid Decl. ¶ 5. Those contentions are specious in light of Sudan’s litigation of similar issues in other cases before its default here. See Shatsky, 795 F.Supp.2d at 83 (considering "defendants’ conduct in parallel cases"); see also Owens, 2016 WL 1170919, at *7-11. Prior to 2006, Sudan had hired U.S. counsel and did appear in several cases in this and other courts. In those actions Sudan asserted jurisdictional defenses under the FSIA as grounds for dismissal. See, e.g., Owens v. Republic of Sudan, 531 F.3d 884 (D.C. Cir. 2008); Rux v. Republic of Sudan, 461 F.3d 461 (4th Cir. 2006); Owens v. Republic of Sudan, 412 F.Supp.2d 99 (D.D.C. 2006). This fact fatally undermines Sudan’s claim that it lacked the understanding or ability to navigate the United States’ legal system or defend against civil litigation involving sovereign immunity issues. Moreover, although Sudan notes, accurately, that it has not previously appeared or sought to have a default judgment vacated in this particular action, Sudan’s Reply at 19, it did previously default and then seek to set aside that default in another case involving the U.S.S. Cole and the very same decedent as in this case, only to turn around and default a second time after the court denied Sudan’s motion to dismiss. See Rux v. Republic of Sudan, No. Civ. A. 2:04-cv-428, 2005 WL 2086202, at *2-3, *12-13 (E.D. Va. Aug. 26, 2005) (explaining procedural history, including Sudan’s default, and motion to vacate entry of default, and denying Sudan’s motion to dismiss for want of subject matter jurisdiction); Rux v. Republic of Sudan, 495 F.Supp.2d 541, 543 (E.D. Va. 2007) (noting that, "[a]fter failing to have Plaintiffs’ Complaint dismissed in its entirety, Sudan notified the Court by letter on October 25, 2006, that it would ‘not defend or otherwise participate in this proceeding on the merits’"). Sudan did the same in a similar case involving the 1998 bombing of the United States embassies in Kenya and Tanzania, see Owens v. Republic of Sudan, 374 F.Supp.2d 1, 8-10 & n.5 (D.D.C. 2005); see also Owens, 2016 WL 1170919, at *9 (finding Sudan’s argument unpersuasive on this ground, as applied to several separate actions in addition to the Owens case, because "the fundamental-ignorance card cannot convincingly be played a second time, especially not after hiring sophisticated U.S. legal counsel, as Sudan did in 2004"). Given that Sudan has already seen the consequences of defaulting, it is difficult to credit Sudan’s claim that it did not appreciate the gravity of its absence.

         Sudan also contends that, because the FSIA was amended in 2008 to allow plaintiffs to collect punitive damages for the first time, "Sudan could not possibly have anticipated or understood the ramifications of these unprecedented amendments." Sudan’s Reply at 21. Yet, for purposes of this Court’s jurisdiction or Sudan’s immunity, the 2008 Amendments did not herald the dramatic change Sudan claims. The FSIA immunity exception Plaintiffs rely upon here previously existed in subsection 1605(a)(7). When that subsection was recodified in section 1605A, the immunity exception was not substantially changed except that it created a new federal cause of action, provided for punitive damages, and provided for recovery by military service members and government contractors. Moreover, Sudan had already participated in litigation claiming, and courts had issued opinions holding, that Sudan lacked immunity under section 1605(a)(7) for providing material support for other acts of terrorism by Al-Qaeda. In fact, one of those decisions was issued after the 2008 FSIA amendments and expressly relied on, and found jurisdiction under, section 1605A. See Owens v. Republic of Sudan, 826 F.Supp.2d 128, 147 (D.D.C. 2011) (explaining repeal of 1605(a)(7) and replacement with section 1605A); id. at 148-51 (finding jurisdiction under section 1605A). To be sure, Sudan may have not appreciated that punitive damages might now be available for its conduct. Sudan cannot seriously contend, however, that it failed to understand the possibility that immunity would be unavailable or that subject-matter jurisdiction would be found.

         In sum, the Court concludes that Sudan’s default in this case was willful.[10]

         C. The Prejudice to Plaintiffs

         Sudan’s willful abdication also posed not-insubstantial costs for Plaintiffs. To set aside the default judgments now would cause prejudice to Plaintiffs. In assessing prejudice, courts consider the possible, tangible harms that may flow from a party’s delayed appearance in the case, including the "‘loss of evidence, increased difficulties of discovery, and an enhanced opportunity for fraud or collusion.’" Gilmore, 675 F.Supp.2d at 110 (quoting Fed. Dep. Ins. Corp. v. Francisco Inv. Corp., 873 F.2d 474, 479 (1st Cir. 1989)). As Sudan notes, "delay in and of itself does not constitute prejudice." Haskins, 755 F.Supp.2d at 130-31. But there is more than delay apparent in this case.

         Plaintiffs posit that, during Sudan’s absence, "critical witnesses have died or been killed, numerous personnel at all levels of the government have left their positions, and undoubtedly governmental records have been destroyed." Pls.’ Opp’n at 14, ECF No. 60. Plaintiffs therefore argue that there "can be no doubt that the Plaintiffs will be materially and actually prejudiced in their effort to take discovery." Id. Sudan casts this argument as conclusory-and in some respects, it is. But, as the movant seeking to demonstrate "good cause, " Sudan has the burden to show that setting aside the default judgment will pose no prejudice for Plaintiffs. And Sudan’s complaint that Plaintiffs "identify no such witnesses or personnel, " Sudan’s Reply at 22, is rich. Of course Plaintiffs cannot identify particular, relevant personnel; as a consequence of Sudan’s default, they have had no access to relevant discovery in this case for over four years. In addition, the Court takes judicial notice that, even among those officials Plaintiffs have identified, at least one critical individual has died: Hassan al Turabi, the head of the National Islamic Front who offered Bin Laden and Al-Qaeda refuge in Sudan, was alive in 2010 when Plaintiffs filed this lawsuit, but passed away a mere ...


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