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Fares v. Smith

United States District Court, District of Columbia

April 7, 2017

ABDUL MOHAMED WAKED FARES, et al., Plaintiffs,
JOHN E. SMITH, et al., Defendants.


          COLLEEN KOLLAR-KOTELLY United States District Judge

         Plaintiffs Abdul Mohamed Waked Fares, Mohamed Abdo Waked Darwich, Lucia Touzard Romo, and Groupo Wisa, S.A., have been designated as Specially Designated Narcotics Traffickers by Defendants pursuant to the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”), 21 U.S.C. § 1901 et seq. In this action, they bring claims pursuant to the Due Process Clause of the Fifth Amendment and the Administrative Procedure Act (“A P A ”) for Defendants' alleged failure to provide them with sufficient post-designation notice regarding the bases for their designations. Presently before the Court are Plaintiffs' [3] Motion for Summary Judgment and Defendants' [14] Motion to Dismiss for Lack of Jurisdiction, or in the Alternative, for Summary Judgment. Upon consideration of the pleadings, [1] the relevant legal authorities, and the record for purposes of the pending motions, the Court DENIES Plaintiffs' [3] Motion for Summary Judgment, DENIES Defendants' [14] Motion to Dismiss, and GRANTS Defendants' [14] Motion for Summary Judgment. For the reasons stated below, the Court concludes that Defendants have provided Plaintiffs with sufficient post-designation notice under both the Due Process Clause and the APA.

         I. BACKGROUND

         A. Statutory Background

         The Kingpin Act authorizes the President to designate “foreign person[s] that play a significant role in international narcotics trafficking” as significant foreign narcotics traffickers (“S F N Ts ”). 21 U.S.C. §§ 1903(b), 1907(7). The Act also authorizes the Secretary of the Treasury, in consultation with other federal government agencies, to designate foreign persons “as materially assisting in, or providing financial or technological support for or to, or providing goods or services in support of, the international narcotics trafficking activities of a[n] [SFNT], ” id. § 1904(b)(2), “as owned, controlled, or directed by, or acting for or on behalf of, a[n] [SFNT], ” id. § 1904(b)(3), or “as playing a significant role in international narcotics trafficking, ” id. § 1904(b)(4). The Secretary of the Treasury has delegated this authority to the Office of Foreign Assets Control (“OFAC”), an agency within the Department of the Treasury. Persons designated pursuant to such authority are referred to as “specially designated narcotics traffickers” (“SDNTs”). 31 C.F.R. §§ 598.803, 598.314. The consequences of an SDNT designation are dire, as the designation acts to block “all such property and interests in property within the United States, or within the possession or control of any United States person, which are owned or controlled by” the designated person. 21 U.S.C. § 1904(b).

         Following designation, an SDNT may “seek administrative reconsideration of his, her or its designation . . ., or assert that the circumstances resulting in the designation no longer apply, and thus seek to have the designation rescinded . . . .” 31 C.F.R. § 501.807. Administrative reconsideration is handled by OFAC. Id. The SDNT may, in addition, seek a meeting with OFAC, although “such meetings are not required, and the office may, at its discretion, decline to conduct such meetings prior to completing a review pursuant to this section.” Id. After OFAC “has conducted a review of the request for reconsideration, it [must] provide a written decision to the blocked person . . . .” Id.

         B. Factual Background

         OFAC designated Plaintiffs as SDNTs on May 5, 2016, along with non-parties Waked Money Laundering Organization (“Waked MLO”) and Nidal Ahmed Waked Hatum. These designations were based on the government's determination that Plaintiffs play a significant role in international narcotics trafficking by facilitating money laundering on behalf of “multiple international drug traffickers and their organizations.” AR 107. Following their designations, Plaintiffs filed a request for reconsideration with OFAC on May 24, 2016. In that request, Plaintiffs asked for access to the administrative record, expedited review of their request for reconsideration, and a meeting with OFAC. AR 3 Plaintiffs promised that the grounds for their request “w[ould] be provided in response to any OFAC questionnaires directed to the Petitioners, and w[ould] be supported by briefing and evidence volunteered by the Petitioners.” Id.

         OFAC denied Plaintiffs' request for reconsideration on June 8, 2016, noting that reconsideration was inappropriate because only 19 days had passed since the initial designation of Plaintiffs as SDNTs, and Plaintiffs had not provided any supporting evidence in conjunction with their request. AR 16-17. Nonetheless, OFAC indicated that, should Plaintiffs' request for reconsideration “be further developed or clarified, ” they could submit another request for reconsideration at a later date. Id. OFAC also informed Plaintiffs that their request for the administrative record was being processed, but noted “that the review process can be lengthy and requires extensive interagency consultation in order to comply with U.S. government regulations regarding the protection of classified, privileged, and otherwise protected information.” AR 18.

         Plaintiffs received the redacted administrative record underlying their SDNT designations in two deliveries on July 5, 2016 and July 18, 2016. AR 22, 112. OFAC's letter accompanying the July 18, 2016 disclosure indicated that “should additional unclassified, non-privileged, or otherwise releasable information become available, ” it would be provided to Plaintiffs. AR 112. OFAC subsequently furnished additional information by means of two unredacted summaries of “otherwise privileged information, ” which were provided to Plaintiffs on August 26, 2016 (“August Summary”) and October 28, 2016 (“October Summary”). AR 289, 292.


         A. Motion to Dismiss for Lack of Subject-Matter Jurisdiction

         Defendants move to dismiss this action as moot pursuant to Federal Rule of Civil Procedure 12(b)(1). To survive a motion to dismiss pursuant to Rule 12(b)(1), Plaintiffs bear the burden of establishing that the Court has subject-matter jurisdiction over their claims. Moms Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007); Ctr. for Arms Control & Non-Proliferation v. Redd, No. CIV.A. 05-682 (RMC), 2005 WL 3447891, at *3 (D.D.C. Dec. 15, 2005). The jurisdiction of federal courts is limited by Article III of the Constitution to the adjudication of actual, ongoing cases or controversies; a limitation that “gives rise to the doctrines of standing and mootness.” Foretich v. United States, 351 F.3d 1198, 1210 (D.C. Cir. 2003); Sierra Club v. Jackson, 648 F.3d 848, 852 (D.C. Cir. 2011). Pursuant to the mootness doctrine, it “is not enough that the initial requirements of standing and ripeness have been satisfied; the suit must remain alive throughout the course of litigation, to the moment of final appellate disposition. If events outrun the controversy such that the court can grant no meaningful relief; the case must be dismissed as moot.” People for the Ethical Treatment of Animals, Inc. v. United States Fish & Wildlife Serv., 59 F.Supp.3d 91, 95 (D.D.C. 2014) (internal quotation marks and citations omitted). “A case is moot when the challenged conduct ceases such that there is no reasonable expectation that the wrong will be repeated in circumstances where it becomes impossible for the court to grant any effectual relief whatever to the prevailing party.” United States v. Philip Morris USA Inc., 566 F.3d 1095, 1135 (D.C. Cir. 2009) (internal quotation marks omitted).

         The Complaint seeks two forms of relief under the Due Process Clause and the APA stemming from Defendants' alleged failure to supply Plaintiffs with sufficient notice regarding the bases for their designations as SDNTs: (i) a declaration that “the administrative record provided by Defendants violates Plaintiffs' due process and statutory rights to adequate post-designation notice and a meaningful opportunity to administratively challenge their designations;” and (ii) an order requiring “Defendants to provide an unredacted copy of their administrative record, or any other solution chosen by the Court or agreed to by the parties which provides Plaintiffs with adequate post-designation notice.” Compl. at 11. Although Defendants have provided additional disclosures to Plaintiffs following the initiation of this lawsuit, there is no question that Defendants have yet to provide all of the relief sought in this action (e.g., the complete unredacted administrative record upon which the SDNT designations were based). In other words, although the government contends that Plaintiffs have received all the disclosure that they are entitled to, Plaintiffs have not received all the relief that they have sought in their Complaint. Accordingly, this case is not moot.

         That is not to say that Plaintiffs are entitled to such additional relief, but rather that this is a merits question that is not properly resolved on the basis of a Rule 12(b)(1) motion for lack of subject-matter jurisdiction. Accordingly, the Court resolves this matter on the basis of Plaintiffs' motion for summary judgment. Nonetheless, the Court observes that its resolution of whether Defendants have provided sufficient notice under the Due Process Clause and the APA would be identical were it instead to proceed on the basis of Defendant's motion to dismiss, as the record for purposes of that motion would be identical to the one considered for purposes of Plaintiff's motion for summary judgment. See Lenox Hill Hosp. v. Shalala, 131 F.Supp.2d 136, 140 n.4 (D.D.C. 2000) (noting that a district court can consider the administrative record for purpose of a motion to dismiss pursuant to Rule 12(b)(1)).

         B. Cross-Motions for Summary Judgment

         Plaintiffs have moved for summary judgment on their claims pursuant to the Due Process Clause and the APA, and Defendants have cross-moved for summary judgment in their favor. Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter o f l a w. ” Fed.R.Civ.P. 56(a). The mere existence of some factual dispute is insufficient on its own to bar summary judgment; the dispute must pertain to a “material” fact. Id. Accordingly, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If material facts are genuinely in dispute, or undisputed facts are susceptible to divergent yet justifiable inferences, summary judgment is inappropriate. Moore v. Hartman, 571 F.3d 62, 66 (D.C. Cir. 2009). Under the particular circumstances of this case, there is no factual dispute for the Court to resolve. Rather, the parties disagree only over the legal question of whether the disclosures by OFAC regarding Plaintiffs' SDNT designations satisfy due process and the APA. There is no dispute, for example, over the timing or content of OFAC's disclosures.

         Furthermore, “when a party seeks review of agency action under the APA [before a district court], the district judge sits as an appellate tribunal. The ‘entire case' on review is a question of law.” Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001). Accordingly, “the standard set forth in Rule 56[] does not apply because of the limited role of a court in reviewing the administrative record . . . . Summary judgment is [] the mechanism for deciding whether as a matter of law the agency action is supported by the administrative record and is otherwise consistent with the APA standard of review.” Southeast Conference v. Vilsack, 684 F.Supp.2d 135, 142 (D.D.C. 2010). T h e A P A “sets forth the full extent of judicial authority to review executive agency action for procedural correctness.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513 (2009). It requires courts to “hold unlawful and set aside agency action, findings, and conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § ...

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