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Holladay v. Islamic Republic of Iran

United States District Court, District of Columbia

September 23, 2019

JOSHUA L. HOLLADAY, et al., Plaintiffs,
v.
ISLAMIC REPUBLIC OF IRAN, et al., Defendants

          MEMORANDUM OPINION AND ORDER

          Randolph D. Moss, United States District Judge

         Plaintiffs-over fifty individuals, including American soldiers, who were injured or killed in forty-three separate terrorist attacks that took place in Iraq between December 17, 2003 and November 20, 2009, and over seventy of their family members-bring this civil action pursuant to the Foreign Sovereign Immunities Act, §§ 1602–1611 (“FSIA”), against six defendants: the Islamic Republic of Iran (“Iran”), its Islamic Revolutionary Guard Corps (“IRGC”), the Iranian Ministry of Intelligence and Security (“MOIS”), Bank Markazi Jomhouri Islami Iran (“Bank Markazi”), Bank Melli Iran (“Bank Melli”), and the National Iranian Oil Company (“NIOC”).[1] See Dkt. 16 at 1–3, 20–38, 116–99 (Am. Compl.). Although the allegations contained in the two-hundred-page complaint are sweeping, the motion currently before the Court poses a narrow question: Have Plaintiffs satisfied the FSIA’s service-of-process requirements? See Dkt. 68 at 3. For reasons explained below, the Court concludes that Plaintiffs have done so as to some but not all defendants.

         I. LEGAL STANDARD

         As explained in more detail below, the key question at issue here-whether Plaintiffs have properly served each defendant-turns on two inquiries. First, the Court must categorize each defendant to determine whether it must be served under § 1608(a) or § 1608(b). Although these provisions are similar in many ways, they also differ in important respects, with each imposing unique demands. Second, after deciding which provision governs as to each defendant, the Court must determine whether Plaintiffs’ attempts to effectuate service satisfied the applicable requirements. Determining the answers to both questions requires the Court to weigh the evidence Plaintiffs have produced in support of their motion. Doing so raises the question as to the proper burden of proof Plaintiffs must satisfy. The D.C. Circuit has opined that a court adjudicating an FSIA case against an absent defendant must “satisfy itself that it has personal jurisdiction.” Mwani v. Osama Bin Laden, 417 F.3d 1, 6 (D.C. Cir. 2005). Under the FSIA, moreover, service of process is a key component of personal jurisdiction. See Foremost-McKesson v. Islamic Republic of Iran, 905 F.2d 438, 442 (D.C. Cir. 1990) (citing 28 U.S.C. § 1330(b)). “In the absence of an evidentiary hearing, ” plaintiffs may satisfy their burden of satisfying personal jurisdiction by making a “prima facie showing” based on “their pleadings” and “bolstered by such affidavits and other written materials as they can otherwise obtain.” Mwani, 417 F.3d at 7 (internal citation and quotation omitted). “The Court must, therefore, satisfy itself Plaintiffs have made a “prima facie showing” that they properly effected service with respect to each defendant.

         II. ANALYSIS

         Section 1608 governs service of process under the FSIA and provides separate paths that plaintiffs must follow depending on the nature of the entity being served. See 28 U.S.C. § 1608. If plaintiffs seek to serve a “foreign state, ” they must comply with the requirement set out in § 1608(a), and, if they seek to serve an “agency or instrumentality of a foreign state, ” they must comply with the requirements of § 1608(b). See Howe v. Embassy of Italy, 68 F.Supp. 3d 26, 31 (D.D.C. 2014). The D.C. Circuit has offered the following guidance for determining which path applies: “if the core functions of the entity are governmental, it is considered the foreign state itself; if commercial, the entity is an agency or instrumentality of the foreign state.” Roeder v. Islamic Republic of Iran, 333 F.3d 228, 234 (D.C. Cir. 2003); see also Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 149–50 (D.C. Cir. 1994) (same). “A nation’s armed forces” or its “Ministry of Foreign Affairs, ” for example, “are clearly . . . governmental, ” id., while a state-owned commercial airline is clearly commercial, see, e.g., Seramur v. Saudi Arabian Airlines, 934 F.Supp. 48, 51 (S.D.N.Y. 1996). Applying this approach here, the Court finds that three of the defendants-Iran, IRGC and MOIS-are “the foreign state itself” and that one of the defendants-Bank Melli-is an “agency or instrumentality” of Iran. With respect to the two remaining defendants-Bank Markazi and NIOC-the Court needs additional information to render a decision.

         Starting with Iran, IRGC, and MOIS, the Court finds that all three are subject to service under § 1608(a) as “the foreign state or [a] political subdivision” thereof. 28 U.S.C. § 1608(a). Iran is, of course, the foreign state itself, and the “core functions” of IRGC and MOIS are inherently governmental. See Nikbin v. Islamic Republic of Iran, 471 F.Supp.2d 53, 59 (D.D.C. 2007) (“[B]oth MOIS and [IRGC]” must be treated as the foreign state for purposes of § 1608(a)); Azadeh v. Gov’t of the Islamic Republic of Iran, No. 16-1467, 2018 WL 4232913, at *39 n.6 (D.D.C. Sept. 5, 2018) (IRGC must be treated as the foreign state itself for purposes of § 1608). IRGC, as a branch of the Iranian Armed Forces, performs a military function, and MOIS serves as Iran’s primary intelligence agency. See Dkt. 16 at 24–30 (Am. Compl. ¶¶ 58– 88). As a result, they are both “so closely bound up with the structure of the state that they must in all cases be considered as the ‘foreign state’ itself, rather than a separate ‘agency or instrumentality’ of the state.” Transaero, Inc., 30 F.3d at 153.

         In contrast, the core function of the Bank Melli is commercial, and it is therefore subject to service as “an agency or instrumentality of a foreign state” under § 1608(b). As described in the declaration of Gary Kleiman, a consultant who specializes in “global emerging economy and financial market analysis, ” and who professes familiarity with “the operations of Bank Markazi, Bank Melli . . ., and NIOC, ” Dkt. 68-19 at 1–2 (Kleiman Decl. ¶ 4), Bank Melli “engages in wide ranging retail and wholesale activities through its domestic network of over 3000 branches and 15 overseas branches and subsidiaries, ” id. at 5 (Kleiman Decl. ¶ 13). “[T]ogether with its subsidiaries, ” Bank Melli “provides commercial banking services in Iran and internationally, ” and “its banking products and services include foreign exchange transactions; foreign currency accounts, long-term and short-term foreign currency investment deposits . . .; money transfer and remittances; plastic card services; imports and exports services; foreign exchange facilities; and imports services in industrial and commercial economic zones.” Id. at 5 (Kleiman Decl. ¶ 14). “As a result of Bank Melli[‘s] significant commercial activities, ” Kleiman attests that “it is considered in the banking industry as primarily having a commercial purpose and [as] a competitor to other large regional banks.” Id. In short, Bank Melli functions much like a large, privately-held bank. See Shoham v. Islamic Republic of Iran, No. 12-508, 2017 WL 2399454, *28–29 (D.D.C. 2017) (the business of banking is commercial in nature).

         The status of the two remaining defendants-Bank Markazi and NIOC-is less clear and cannot be resolved on the current record. Kleiman attests that Bank Markazi “is the central bank of Iran” tasked with setting “monetary and credit policies” and “granting loans to state enterprises and agencies.” Dkt. 68-19 at 3 (Kleiman Decl. ¶ 8) (citation and quotation omitted). He further attests that the bank “sets and supports sector credit directives where agriculture, manufacturing and mining, and construction and housing accounted for over half the total in recent years, ” id., and that, in 1960, Bank Markazi assumed certain responsibilities (“note issue, supervisory and government account operation”) “previously conducted by Bank Melli, ” id. at 4 (Kleiman Decl. ¶ 11). Based on the Kleiman declaration, some-and perhaps much-of what Bank Markazi does is plainly governmental in nature. Monetary policy, for example, is one of the key tools that governments use to influence their nation’s economy. Nor can the Court conclude, on the existing record, that Bank Markazi acts in a commercial manner when it “loans” funds to “state enterprises and agencies.” Moreover, even if some of the functions that Bank Markazi performs are commercial in nature, the current record does not provide a basis for the Court to decide whether the bank’s governmental or commercial activities predominate.

         Although it appears more likely that NIOC’s core functions are commercial-as opposed to governmental-the record is, again, incomplete. The Kleiman declaration acknowledges that NIOC performs “dual” functions, some governmental and others commercial. Id. at 6 (Kleiman Decl. ¶ 17). The declaration provides some information regarding NIOC’s commercial activity, including, most notably, that NIOC “engages in the exploration and production of oil and natural gas resources.” Id. at 7 (Kleiman Decl. ¶ 22). It provides very little information, however, about the extent of NIOC’s governmental activity beyond the conclusory assertion that it “has been an instrument of government” and that “NIOC’s Board Chair” also serves as the Minister of Petroleum and, in that role, performs “public administration responsibility[ies.]” Id. (Kleiman Decl. ¶¶ 17–18). Without a better understanding of NIOC’s governmental responsibilities, and an understanding of how those responsibilities compare to the company’s commercial activities, the Court cannot determine whether NIOC is subject to service under § 1608(a) (as a foreign state or political subdivision) or under § 1608(b) (as an agency or instrumentality of a foreign state).

         In light of the above, the Court will (1) determine whether Iran, IRGC, and MOIS have been properly served under § 1608(a); (2) determine whether Bank Melli has been properly served under § 1608(b); and (3) deny Plaintiffs’ motion for a determination that they have effectively served Bank Markazi and NIOC as premature, pending the Court’s receipt of additional information regarding the status of Bank Markazi and NIOC. The Court further notes that to the extent either of those entities should be treated as a foreign state or political subdivision of a foreign state, Plaintiffs will need to do more to effect service and that, to the extent they are treated as agency or instrumentality of a foreign state, the Court may require additional information about the delivery and return of the documents served pursuant to § 1608(B)(3)(B).

         A. Service on Iran, MOIS, and IRGC pursuant to § 1608(a)

         As explained above, service on a foreign state or political subdivision is governed by § 1608(a), which “prescribes four methods of service, in descending order of preference. Ben-Rafael v. Islamic Republic of Iran, 540 F.Supp.2d 39, 52 (D.D.C. 2008). Plaintiffs must attempt service by the first method (or determine that it is unavailable) before proceeding to the second method, and so on.” Id. Specifically, a party may serve a foreign state:

(1) by delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the foreign ...

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