Kashef v. BNP Paribas S.A.

925 F.3d 53

Entesar Osman KASHEF, Alfadel Mosabal, Abubakar Abakar, Siama Abdelnabi Hamad, Abbo Ahmed Abakar, Hawa Mohamed Omar, Jane Doe, Nyanriak Tingloth, Reverend Anderia Lual, Nicolas Hakim Lukudu, Turjuman Ramadan Adam, Johnmark Majuc, Joseph Jok, Halima Samuel Khalifa, Ambrose Martin Ulau, Sandi (Sunday) Georgari Marjan, Shafika G. Hassan, Jane Roe, Judy Doe, Sara Noureldirz Abdalla, and Amir Ahmed, Plaintiffs-Appellants,

v.BNP PARIBAS S.A., a French Corporation, BNP Paribas North America, Inc., a Delaware Corporation, Does 1–10, and BNP Paribas S.A., New York Branch, Defendants-Appellees.

No. 18-1304

August Term 2018

United States Court of Appeals, Second Circuit.

Argued December 12, 2018

Decided May 22, 2019

Tobias Barrington Wolff, University of Pennsylvania Law School, Philadelphia, PA (Kathryn Lee Boyd & Thomas B. Watson, McKool Smith, PC, Los Angeles, CA, on the brief ), for Plaintiffs-Appellants.

Carmine D. Boccuzzi, Jr. (Jonathan I. Blackman & Avram E. Luft, on the brief ), Cleary Gottlieb Steen & Hamilton LLP, New York, NY, for Defendants-Appellees.

Before: SACK, PARKER, and CHIN, Circuit Judges.

BARRINGTON D. PARKER, Circuit Judge:

Defendant BNP Paribas S.A., a French corporation, is the parent company of various BNP Paribas subsidiaries across the world, including the other named Defendants in this action (collectively "BNPP"). BNPP is a global leader in banking and financial services, operating in 73 countries, including in the United States. BNPP’s annual revenue exceeds 40 billion euros and its total assets amount to approximately 1.9 trillion euros, making it one of the five largest banks in the world.¹

Following a guilty plea, BNPP was convicted of federal and state felonies for evading U.S. sanctions on Sudan. Plaintiffs, who are alleged victims of the Sudanese regime’s atrocities, sued BNPP in the United States District Court for the Southern District of New York, bringing various tort claims under New York law. They allege that BNPP conspired with and aided and abetted the Sudanese regime in its commission of widespread atrocities, including murder, mass rape, torture, and deliberate infection with HIV, among others. They also allege claims of negligence per se, intentional infliction of emotional distress, and negligent infliction of emotional distress.

The District Court (Nathan, J. ) dismissed Plaintiffs’ claims under Federal Rule of Civil Procedure 12(b)(6), reasoning that they were barred by the act of state doctrine and, for the Plaintiffs who were adults at the time of injury (the "Adult Plaintiffs"), otherwise untimely. Because we conclude that the District Court misapplied the act of state doctrine and erroneously determined that the Adult Plaintiffs’ claims were untimely, we vacate and remand for further proceedings.

BACKGROUND

The atrocities taking place in Sudan are widely known and have been condemned by both the United States and the international community as genocide. See, e.g. , H.R. Con. Res. 467, 108th Cong. (2004) (enacted); S. Con. Res. 133, 108th Cong. (2004) (enacted). In 1997 and 2006, pursuant to the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. § 1701 et seq. , the U.S. Government imposed sanctions on Sudan aimed at halting the genocide. See Exec. Order No. 13,412 § 1, 71 Fed. Reg. 61,369 (Oct. 17, 2006) ; Exec. Order No. 13,067 § 1, 62 Fed. Reg. 59,989 (Nov. 5, 1997) ; see generally 31 C.F.R. pt. 538. Nevertheless, as BNPP itself admitted, from 2002 to 2007, it "conspired with numerous Sudanese banks and entities as well as financial institutions outside of Sudan to violate the U.S. embargo by providing Sudanese banks and entities access to the U.S. financial system." Stipulated Statement of Facts ¶ 17, United States v. BNP Paribas, S.A. , No. 14 -cr-00460-LGS (S.D.N.Y. 2015), ECF No. 13 Ex. 2.

In 2015, the Federal Government and New York State secured convictions of BNPP for federal and state felonies. BNPP pled guilty to conspiracy to commit an offense against the United States in violation of 18 U.S.C. § 371, by conspiring to violate the IEEPA and the Trading with the Enemy Act, 50 U.S.C. § 4303 et seq. BNPP also pled guilty to New York state crimes of falsifying business records in the first degree, in violation of Penal Law § 175.10, and conspiracy in the fifth degree, in violation of Penal Law § 105.05. BNPP was required to pay almost nine billion dollars in forfeitures and fines, the largest financial penalty ever imposed in a criminal case.²

BNPP admitted, in a Stipulated Statement of Facts (the "SSOF"), that the allegations in the federal and state criminal informations were true, as were additional facts set forth in the SSOF, and that had the matter gone to trial, the Federal Government and New York State would have proven them beyond a reasonable doubt. BNPP conceded that it "continued to process transactions involving Sudanese Sanctioned Entities—despite being well aware that its conduct violated U.S. law—because the business was profitable" and BNPP "did not want to risk its longstanding relationship with Sudanese clients." SSOF ¶ 24; see also id. ¶¶ 59–73 (outlining the evidence of BNPP’s knowledge of its illegal conduct).

BNPP admitted that it employed many sophisticated methods to violate U.S. law. First, it "carried out transactions with Sanctioned Entities and evaded the U.S. embargo" against Sudan by "deliberately modifying and omitting references to Sudan in the payment messages accompanying these transactions." Id. ¶ 18. Second, in cooperation with Sudanese entities, it utilized complicated payment structures with no legitimate business purpose to mask transaction information that could trigger scrutiny. Id. ¶ 16. Third, it moved "illicit transactions through unaffiliated satellite banks" to "disguise the involvement of Sanctioned Entities in U.S. dollar transactions," id. ¶¶ 18, 23–26, and went as far as coordinating with satellite banks to institute waiting periods between transfers so that "U.S. authorities would be unable to link the payments to the involved Sanctioned Entit[ies]," id. ¶ 24.

BNPP also conceded that it had knowledge of the atrocities being committed in Sudan and of the consequences of providing Sudan access to U.S. financial markets. Specifically, BNPP admitted that its "central role in providing Sudanese financial institutions access to the U.S. financial system, despite the Government of Sudan’s role in supporting terrorism and committing human rights abuses, was recognized by BNPP employees." Id. ¶ 20. For example, in 2004, a manager at BNPP described the political environment in Sudan as "dominated by the Darfur crisis" and called it a "humanitarian catastrophe." Id. In April 2006, a senior BNPP compliance officer stated in a memorandum that "the growth of revenue from oil is unlikely to help end the conflict" and that "it is probable that Sudan will remain torn up by insurrections and resulting repressive measures for a long time." Id. In 2007, a BNPP compliance officer told other high-level compliance and legal personnel that the Sudanese entities with which BNPP dealt "play a pivotal part in the support of the Sudanese government which ... has hosted Osama Bin Laden and refuses United Nations intervention in Darfur." Id. A few months later, a BNPP executive warned in a memorandum that "in a context where the International Community puts pressure to bring an end to the dramatic situation in Darfur, no one would understand why BNP Paribas persists in Sudan which could be interpreted as supporting the leaders in place." Id. The SSOF makes clear that despite BNPP’s understanding of the likely consequences of its involvement with Sudan, it persisted in illegal conduct on a wide scale because its "business [with Sudan] was profitable." Id. ¶ 37.

Plaintiffs, who now reside lawfully in the United States, sued BNPP in the Southern District of New York on behalf of a putative class of victims of the genocide in Sudan. They allege, and we must accept as true, that BNPP circumvented U.S. sanctions and provided Sudan with financial resources knowing that Sudan was committing atrocities, knowing that the purpose of the sanctions was to prevent Sudan from acquiring funds with which to carry out those atrocities, and knowing that Sudan’s likely purpose in using the U.S. financial markets for illegal oil sales was to acquire billions of U.S. dollars to purchase the weapons and materials used by militia forces.

Specifically, Plaintiffs allege that they were the victims of atrocities including mass rape, torture, deliberate infection with HIV, and being forced to watch the murder and rape of their family members. Second Amended Complaint ¶¶ 22–52, Kashef v. BNP Paribas SA , 316 F. Supp. 3d 770 (S.D.N.Y. 2018), ECF No. 49. One plaintiff alleges that militia forces invaded her home, brutally beat her family, and murdered her father in front of her children. Id. ¶ 37. She and her children found themselves in camps where they were detained separately, starved, tortured, subjected to chemical weapons, beaten, and raped. Id. Two of her children died in the camps, and the plaintiff was forced to search for them among dead bodies being held in refrigerators on site. Id. Her teenage son, she alleges, had been locked alive in a freezer for three days. Id.

Another plaintiff alleges that she was kidnapped from her home, blindfolded, and locked in a room without food, light, or water. Id. ¶ 41. She was raped and tortured for days, causing infection with HIV and the miscarriage of an existing pregnancy. Id. Her husband was arrested, tortured, and eventually murdered. Id. All the Plaintiffs allege similar injuries at the hands of militia forces, which were armed and dispatched using the money and resources made available as a consequence of BNPP’s violation of U.S. sanctions on Sudan.

In the Second Amended Complaint (the "SAC"), Plaintiffs asserted twenty claims arising under New York tort law.³ Claims 1, 2, 15, and 16 were primary...