Karadzic v. Gacki

602 F.Supp.3d 103

Luka KARADZIC, Plaintiff,

v.Andrea M. GACKI, in her official capacity as Director, Office of Foreign Assets Control, et al., Defendants.

Case No. 1:21-cv-03019 (TNM)

United States District Court, District of Columbia.

Signed May 6, 2022

Peter Robinson, Peter Robinson, Lawyer, Raleigh, NC, for Plaintiff.

Stuart Justin Robinson, U.S. Department of Justice, Civil Division, San Francisco, CA, for Defendants.

MEMORANDUM OPINION

TREVOR N. McFADDEN, UNITED STATES DISTRICT JUDGE

In 2003, the Treasury's Office of Foreign Assets Control (OFAC) sanctioned Luka Karadzic for supporting his brother, Radovan Karadzic, the former President of the Bosnian Serb Republic. Several years ago, Luka asked OFAC to remove those sanctions because, he said, the reasons it sanctioned him no longer applied. OFAC refused. So Luka now sues OFAC and its Director (collectively, OFAC), claiming that its refusal was arbitrary and capricious. Both parties filed motions for summary judgment. The Court finds that OFAC's refusal was not arbitrary and capricious because it permissibly relied on Luka's past actions to maintain its sanctions. More, Luka has recently made statements in support of his brother that justify continued sanctions. The Court will grant OFAC's motion and will deny Luka's cross-motion.

I.

OFAC derives its authority to impose sanctions from several statutes and executive orders. In the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701 et seq , Congress gave the President authority to "deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat." Id. § 1701(a). If the President declares this national emergency, IEEPA permits him to investigate and freeze any property interest a foreign national has in property subject to the jurisdiction of the United States. See id. § 1702(a)(1)(B).

Following the conflict in the Balkans in the 1990s, President George W. Bush declared a national emergency and issued Executive Order 13219 (EO 13219 ). See 66 Fed. Reg. 34777 (June 26, 2001). EO 13219 addressed "persons engaged in, or assisting, sponsoring, or supporting, (i) extremist violence in ... the Western Balkans region, or (ii) acts obstructing implementation of the Dayton Accords in Bosnia or United Nations Security Council Resolution 1244 of June 10, 1999, in Kosovo[.]" Id. The actions of these individuals, the executive order said, "constitute an unusual and extraordinary threat to the national security and foreign policy of the United States." Id. EO 13219 blocked "all property and interests in property" of those individuals listed in the order and any other persons designated by OFAC in consultation with the Secretary of State. Id. § 1.

Two years later, President Bush issued Executive Order 13304 (EO 13304 ). See 68 Fed. Reg. 32313 (May 28, 2003). EO 13304 included a new list of sanctioned individuals and revised the criteria for designating sanctioned individuals. See id. §§ 2–3. The order allows OFAC to sanction someone found "to have actively obstructed, or [who] pose[s] a significant risk of actively obstructing ... the Dayton Accords or the Conclusions of the Peace Implementation Conference held in London on December 8–9, 1995." Id. § 3.

The Treasury delegated to OFAC its authority under EO 13219 and EO 13304. See 31 C.F.R. § 588.802. Sanctioned individuals are known as Specially Designated Nationals and Blocked Persons (SDNs). See Defs.’ Mot. for Summ. J. (Defs.’ Mem.) at 10, ECF No. 7-1.¹ OFAC adds designated individuals to a so-called SDN List. Id. A designated individual may seek his removal from the SDN List by "assert[ing] that the circumstances resulting in the designation no longer apply." 31 C.F.R. § 501.807. The individual "may submit arguments or evidence that the person believes establishes that insufficient basis exists for the designation." Id. § 501.807(a). After conducting a review, OFAC "will provide a written decision to the blocked person." Id. § 501.807(d).

EO 13304 includes the Karadzic brothers in its list of sanctioned individuals. Admin. Rec. (AR) at 2, ECF No. 13. Radovan was a founding member and President of the Serbian Democratic Party, President of the Serbian Republic of Bosnia and Herzegovina, and Supreme Commander of its armed forces until his resignation in 1996. Id. at 13–14. He "was an advocate for and actively pursued the creation of an ethnically pure geographic region." Id. at 14. The International Criminal Tribunal for the former Yugoslavia (ICTY) indicted Radovan in 1995 on two counts of genocide, but he evaded arrest and lived in hiding until 2008. Id. Along with Radovan, OFAC designated several members of his family, including Luka, largely for their support of Radovan. See Defs.’ Mem. at 11; Compl. ¶¶ 13–14, ECF No. 1.

In 2018, Luka petitioned for his removal from the SDN List. See AR at 37–38. He claimed that he "had nothing to do with the crimes for which his brother was convicted and has never been charged with any crimes arising out of the war in the former Yugoslavia." Id. at 38. He noted that authorities apprehended and imprisoned his brother over a decade ago, so the reason for placing him on the list no longer applied. Id.

In response, OFAC sent Luka several requests for information. See id. at 39–44. Through counsel, Luka answered each request. See id. at 45–47. He claimed that he provided no support to Radovan while Radovan was in hiding. Id. at 46. In response to a request about his employment activities, Luka said that in the past he had "leased gas stations." Id. After investigating, OFAC pointed to open source information that showed Luka had "leased several gas stations from Jugopetrol, which served as one of the main channels of Radovan Karadzic's money supply during his time in hiding." Id. at 142. OFAC requested information about the gas stations and asked Luka for any evidence he could provide to rebut the open source information. Id.

Luka replied he had been a share owner of the gas company Komotko since 2000. Id. at 144. He claimed Komotko was not profitable because of the sanctions. Id. He reasserted that he did not provide any money to Radovan before, during, or after this business venture. Id. Luka's counsel argued in the letter transmitting Luka's responses that "the more pertinent question OFAC should consider is whether the circumstances resulting in his designation in 2003 continue to apply in 2021. We contend that even if OFAC decides to credit the rumors that Luka Karadzic helped his brother evade arrest some 20 years ago, there is no reason to maintain the sanctions against him in 2021." Id. at 150–51.

OFAC then issued its final determination. Id. at 2–3. After stating that it engaged in interagency consultation and considered all the materials Luka submitted, it found that Luka "continues to meet the criteria for designation" and "has not presented credible evidence that the circumstances resulting in his designation no longer apply." Id. at 2. Among other justifications for its decision, OFAC cited a 2003 decision by the High Representative to Bosnia and Herzegovina finding that Luka helped "indicted war criminals evade arrest." Id. It noted that the High Representative called out Luka for "being a part of Radovan Karadzic's support network." Id. More, OFAC found that Luka either had or posed a significant risk of obstructing the Dayton Accords or the Conclusions of the Peace Implementation Conference Council held in London in 1995. Id. Finally, OFAC highlighted Luka's public pronouncements that the Hague Tribunal that convicted Radovan was "illegitimate and illegal" and used "false proof [and] fake witnesses." Id. at 2–3. These claims, OFAC said, challenged the "credibility of international institutions that contribute to the regional stability." Id. at 3.

Luka then sued. OFAC moved for summary-judgment, and Luka cross-moved for summary judgment. The motions are now ripe.²

II.

Under Federal Rule of Civil Procedure 56(a), "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." "[W]hen a party seeks review of agency action under the APA, the district judge sits as an appellate tribunal." Am. Bioscience, Inc. v. Thompson , 269 F.3d 1077, 1083 (D.C. Cir. 2001). This means that "[t]he entire case on review is a question of law." Id. (cleaned up).

Under the APA, a court must "hold unlawful and set aside agency action" that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). "The scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency." Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). An agency action is arbitrary and capricious when "the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Id.

"[I]f [ ] OFAC's actions were not arbitrary and capricious and were based on substantial evidence," the Court must uphold its decision. Holy Land Found. for Relief & Dev. v. Ashcroft , 333 F.3d 156, 162 (D.C. Cir. 2003). "Once assured the [agency] has engaged in reasoned decisionmaking, it is not for [the Court] to reweigh the conflicting evidence or otherwise to substitute [its] judgment for that of the [agency]."

Ind. Mun. Power Agency v. FERC, 56 F.3d 247, 254 (D.C. Cir. 1995) ; see also Pub....