Lelchook v. Islamic Republic of Iran

224 F.Supp.3d 108

Ester LELCHOOK, individually and as personal representative of the Estate of David Martin Lelchook; Michael Lelchook; Yael Lelchook; Alexander Lelchook; and Doris Lelchook, Plaintiffs,

v.The ISLAMIC REPUBLIC OF IRAN ; The Central Bank of the Islamic Republic of Iran; Bank Saderat Iran; and Bank Saderat, PLC, Defendants.

Civil Action No. 15–13715–PBS

United States District Court, D. Massachusetts.

Signed December 20, 2016

Robert J. Tolchin, Marna F. Berkman, The Berkman Law Office, LLC, Brooklyn, NY, for Plaintiffs.

Jeremy D. Frey, Pepper Hamilton LLP, Philadelphia, PA, William M. Taylor, Pepper Hamilton LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

Saris, C.J.

INTRODUCTION

David Lelchook, an American citizen, was killed by a rocket fired by Hezbollah into northern Israel during the summer of 2006. His relatives, the plaintiffs here, allege that the defendants—the Islamic Republic of Iran ("Iran"), the Central Bank of the Islamic Republic of Iran ("CBI"), Bank Saderat Iran ("BSI"), and Bank Saderat, PLC ("BSPLC")—helped wire money to Hezbollah. The plaintiffs have brought claims under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602 et seq. , and the Antiterrorism Act ("ATA"), 18 U.S.C. § 2331 et seq. , as well as supplemental tort claims under Israeli and Massachusetts law. BSPLC now moves to dismiss for lack of personal jurisdiction. The Court DENIES the defendant's motion (Docket No. 88) and TRANSFERS the case to the Eastern District of New York pursuant to 28 U.S.C. § 1631.

FACTUAL AND PROCEDURAL BACKGROUND

This case has traversed a long and torturous path. The plaintiffs initially filed this lawsuit in the District Court for the District of Columbia. See Lelchook v. Cent. Bank of the Islamic Republic of Iran , Civ. No. 10–1184 (RCL) (D.D.C. Aug. 20, 2013) ("Lelchook I "). In that case, the plaintiffs brought the same claims as those brought here: FSIA claims, ATA claims, and Israeli tort claims. While the plaintiffs' claims were pending in Lelchook I , another group of plaintiffs brought the same set of claims against the same four defendants. See Kaplan v. Cent. Bank of the Islamic Republic of Iran , 961 F.Supp.2d 185, 190 (D.D.C. 2013). The claims at issue in Kaplan involved different rocket attacks during the same 34–day conflict along the border between Israel and Lebanon. Id. at 188. The Kaplan court dismissed all claims against BSPLC and BSI, including the claims against BSPLC at issue here: that BSPLC had violated the ATA by aiding and abetting, or directly engaging in, international terrorism. Id. at 206. The court reasoned that the ATA's "act of war" exception precluded liability against BSPLC. Id. at 199–201 ; see also 18 U.S.C. § 2336(a) ("No action shall be maintained ... for injury or loss by reason of an act of war."). The court did not address whether it had personal jurisdiction over BSPLC at the time of its dismissal.

Citing its decision in Kaplan , but without affording the Lelchook I plaintiffs a separate opportunity to brief the applicability of the "act of war" exception, the court dismissed all of the plaintiffs' claims against BSI and BSPLC. See Lelchook I , slip op. at 2. Specifically, the court dismissed "plaintiffs' FSIA claims against BSI," "all of plaintiffs' ATA claims" against BSPLC, and all "Israeli Tort claims against BSI and BSPLC." Id. Again, the court did not address personal jurisdiction with respect to BSPLC.

After this adverse ruling in the District of Columbia, the plaintiffs refiled the case here on November 2, 2015. BSPLC then moved to transfer this case under 28 U.S.C. § 1404(a) back to the District of Columbia. After extensive briefing and two hearings, the Court denied BSPLC's motion to transfer. Lelchook v. Islamic Republic of Iran , No. CV 15–13715–PBS, 199 F.Supp.3d 314, 315–16, 2016 WL 4203415, at *1 (D. Mass. Aug. 9, 2016). The Court incorporates and assumes familiarity with that opinion.

The plaintiffs then filed an amended complaint. This latest iteration provides two bases for personal jurisdiction: First, the plaintiffs argue that the rocket attack that killed David Lelchook was directed at the United States. Second, the plaintiffs assert that some or all of the $50 million transferred between BSPLC and its parent bank—and that was ultimately wired to Hezbollah—was processed through the United States. BSPLC now moves to dismiss for lack of personal jurisdiction asserting that neither theory provides a basis for jurisdiction.

DISCUSSION

I. Standard of Review

On a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of proving that the Court has personal jurisdiction over the defendant. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A. , 290 F.3d 42, 50 (1st Cir. 2002). "When a district court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, as in this case, the ‘prima facie’ standard governs its determination." United States v. Swiss Am. Bank, Ltd. , 274 F.3d 610, 618 (1st Cir. 2001) ("Swiss Am. Bank III "). The prima facie standard "permits the district court to consider only whether the plaintiff has proffered evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction." Daynard , 290 F.3d at 51 (quotation marks omitted). The Court "must accept the plaintiff's (properly documented) evidentiary proffers as true," and "construe them in the light most congenial to the plaintiff's jurisdictional claim." Adelson v. Hananel , 510 F.3d 43, 48 (1st Cir. 2007) (quotation marks omitted). The facts put forward by the defendants "become part of the mix only to the extent that they are uncontradicted." Id.

II. First Theory of Jurisdiction: Rocket Attack Targeted Forum

The plaintiffs' first theory is that the rocket that Hezbollah fired from Lebanon into Israel directly targeted the United States.

In federal question cases, like this one, "the constitutional limits of the court's personal jurisdiction are drawn in the first instance with reference to the due process clause of the fifth amendment." Lorelei Corp. v. Cnty. of Guadalupe , 940 F.2d 717, 719 (1st Cir. 1991). "In such circumstances, the Constitution requires only that the defendant have the requisite ‘minimum contacts' with the United States, rather than with the particular forum state (as would be required in a diversity case)." United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp. , 960 F.2d 1080, 1085 (1st Cir. 1992). "The defendant's national contacts take center stage because the rule applies only to situations in which federal courts draw jurisdictional authority from the federal sovereign (unreinforced by ‘borrowed’ state statutes), and, thus, the applicable constitutional requirements devolve from the Fifth rather than the Fourteenth Amendment." United States v. Swiss Am. Bank, Ltd. , 191 F.3d 30, 36 (1st Cir. 1999) ("Swiss Am. Bank I "). The analysis under the two due process clauses is otherwise the same. See Waldman v. Palestine Liberation Org. , 835 F.3d 317, 331 (2d Cir. 2016) ("[W]e conclude that the minimum contacts and fairness analysis is the same under the Fifth Amendment and the Fourteenth Amendment in civil cases and proceed to analyze the jurisdictional question."). Non-sovereign entities, even those with governmental attributes, have due process rights under the Fifth Amendment. See id. at 329.

This "constitutional inquiry proceeds in three steps: relatedness, purposeful availment, and reasonableness." Swiss Am. Bank I , 191 F.3d at 36. The First Circuit has explained the steps as follows:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

Adelson , 510 F.3d at 49 (quotation marks and internal citations omitted).¹ The plaintiff "must succeed on all three prongs in order to establish personal jurisdiction." C.W. Downer & Co. v. Bioriginal Food & Sci. Corp. , 771 F.3d 59, 65 (1st Cir. 2014). If the plaintiff fails to satisfy the first two prongs, the Court need not reach the issue of reasonableness. Sawtelle v. Farrell , 70 F.3d 1381, 1394 (1st Cir. 1995) ("[T]he gestalt factors come into play only if the first two segments of the test for specific jurisdiction have been fulfilled.").

The relatedness prong is a "flexible, relaxed standard," which "requires the plaintiff to show a demonstrable nexus between its claims and the defendant's forum-based activities, such that the litigation itself is founded directly on those activities." C.W. Downer , 771 F.3d at 66 (quotation marks, internal citations, and alterations omitted). "The purposeful availment prong represents a rough quid pro quo: when a defendant deliberately targets its behavior toward the society or economy of a particular forum, the forum should have the power to subject the defendant to judgment regarding that behavior." Id. (quotation marks, internal citations, and alterations omitted).

In assessing the purposeful availment prong, the proper object of the analysis is the forum itself, not the forum's residents. See Walden v. Fiore , ––– U.S. ––––, 134 S.Ct. 1115, 1122, 188 L.Ed.2d 12 (2014). In Walden , the Supreme Court held that a Nevada district court lacked personal jurisdiction over a Georgia police officer who seized cash from individuals in the Atlanta airport during their return trip to Nevada. The Court explained that "our ‘minimum contacts' analysis looks to the defendant's contacts with the forum State itself, not the defendant's contacts...