Yaakov v. Lebanese Canadian Bank

739 F.3d 45

Yaakov LICCI, a minor, by his father and natural guardian, Elihav LICCI, and by his mother and natural guardian, Yehudit Licci, et al., Plaintiffs–Appellants–Movants–Petitioners,

v.LEBANESE CANADIAN BANK, SAL; American Express Bank Ltd., Defendants–Appellees–Respondents–Respondents.

Docket No. 10–1306–cv.

United States Court of Appeals, Second Circuit.

Argued: Feb. 25, 2011.

Decided: Oct. 18, 2013.

Amended: Jan. 9, 2014.

Robert J. Tolchin (Meir Katz, of counsel), The Berkman Law Office, LLC, Brooklyn, NY, for Plaintiffs–Appellants–Movants–Petitioners.

Mark P. Ladner, Morrison & Foerster LLP, New York, NY, for Defendant–Appellee–Respondent–Respondent American Express Bank Ltd.

Before: KATZMANN, Chief Judge, and KEARSE and SACK, Circuit Judges.

PER CURIAM:

On March 5, 2012, this Court filed an opinion affirming the judgment of the United States District Court for the Southern District of New York (George B. Daniels, Judge ) insofar as it dismissed that portion of the complaint that asserted claims against the defendant American Express Bank Ltd. (“AmEx”). ¹Licci ex rel. Licci v. Lebanese Can. Bank, SAL and Am. Express Bank, Ltd., 672 F.3d 155 (2d Cir.2012) (“ AmEx ”). On January 7, 2013, the appellants filed what they styled as a motion for leave to file a petition for rehearing and rehearing en banc prior to entry of judgment against them. They appended to the motion a copy of the petition they sought to file.

On September 18, 2013, the appellants filed a letter pursuant to Federal Rule of Civil Procedure 28(j) calling to our attention a decision by the New York Supreme Court, Appellate Division, First Department, in Elmaliach v. Bank of China Ltd., 110 A.D.3d 192, 971 N.Y.S.2d 504 (1st Dep't 2013) (“Bank of China ”). At our request, AmEx responded to the 28(j) letter on September 27, 2013, and the appellants responded to that letter on October 16, 2013.

We now grant the appellants' motion for leave to file a petition for panel rehearing, even though a judgment in this appeal had yet to issue, and we deny that petition.²

BACKGROUND

The facts and history of this litigation insofar as it involves the defendant AmEx are set forth in our opinion in AmEx, 672 F.3d at 156, which in turn refers to a more complete version of the facts contained in Licci ex rel. Licci v. Lebanese Can. Bank, SAL, 673 F.3d 50 (2d Cir.2012). We wrote in AmEx:

This case concerns a series of rocket attacks launched by Hizballah, a Lebanese terrorist organization, at targets in northern Israel in July and August 2006. The plaintiffs are American, Canadian, and Israeli civilians who were injured, or whose family members were injured or killed, during the rocket attacks. They allege that [Lebanese Canadian Bank (“LCB”) ] knowingly maintained bank accounts for an alleged Hizballah affiliate, the Shahid (Martyrs) Foundation (“Shahid”), and carried out dozens of international wire transfers on Shahid's behalf. These wire transfers, which totaled several million dollars, were conducted using LCB's correspondent bank account at AmEx in New York. The plaintiffs assert that AmEx, by facilitating these wire transfers on behalf of LCB and Shahid, breached a legal duty of care to the plaintiffs and thereby caused the plaintiffs' injuries.

AmEx, 672 F.3d at 156. The parties disagreed as to whether New York or Israeli law governs the plaintiffs' claims against AmEx. Assuming there is an actual conflict between New York and Israeli law, we applied New York's interest-analysis test to determine which law should apply and concluded that

New York has the greatest interest in this litigation. All of the challenged conduct undertaken by AmEx occurred in New York, where AmEx is headquartered and where AmEx administers its correspondent banking services. Although the plaintiffs' injuries occurred in Israel, and Israel is also the plaintiffs' domicile, those factors do not govern where, as here, the conflict pertains to a conduct-regulating rule.

Id. at 158. We further concluded that

New York, not Israel, has the stronger interest in regulating the conduct of New York-based banks operating in New York. See, e.g., [Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189, 198, 491 N.Y.S.2d 90, 96, 480 N.E.2d 679, 684–85 (1985) ] (noting the “locus jurisdiction's interests in protecting the reasonable expectations of the parties who relied on it to govern their primary conduct”). Accordingly, even assuming that the district court was mistaken in deciding that there was no actual conflict between New York law and Israeli law, ... a choice-of-law analysis would nonetheless require application of New York law to the plaintiffs' negligence claim against AmEx.Id. The parties agreed (as do we) that under New York law, AmEx has no liability to the appellants for the harm to them that is the subject of this action. See Lerner v. Fleet Bank, N.A., 459 F.3d 273, 286 (2d Cir.2006). We therefore decided that the case against AmEx must be dismissed. We entered no judgment, however, because the appeal regarding the district court's in personam jurisdiction over the other defendant, Lebanese Canadian Bank, SAL, remains pending following our certifying and the New York Court of Appeals responding to questions vital to that issue.

DISCUSSION

The appellants now principally argue that under New York law as recently expressed by the Appellate Division, First Department, in Bank of China, we must withdraw our AmEx opinion applying New York law and conclude instead that Israeli law governs their claims against AmEx. We decline to do so.

I. The Binding Nature of the Bank of China Decision

We are bound, of course, by the law of New York as interpreted by the New York Court of Appeals. See Comm'r v. Estate of Bosch, 387 U.S. 456, 464, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967); 28 U.S.C. § 1652. We “consider the language of the state intermediate appellate courts to be helpful indicators of how the state's highest court would rule.” DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir.2005). “Although we are not strictly bound by state intermediate appellate courts,” we will look to their decisions unless “convinced by other persuasive data that the highest court of the state would decide otherwise.” Id. (quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940)); see also Estate of Bosch, 387 U.S. at 465 (“[E]ven in diversity cases [the Supreme] Court has ... held that while the decrees of lower state courts should be attributed some weight ... the decision is not controlling ... where the highest court of the State has not spoken on the point.”) (second and third ellipses in original; citation, internal quotation marks, and some alterations omitted).

We conclude that we are not bound by the First Department's decision in Bank of China. The New York Court of Appeals has already prescribed the choice-of-law rules applicable to the case at bar in Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985). Bank of China is thus not a statement of an unsettled or ambiguous rule, but rather an application of a previously established rule. Because we are persuaded that it is a mistaken application, as explained below, we decline to follow it.

II. The Persuasiveness of the Bank of China Opinion

The crucial New York Court of Appeals decision relevant to this proceeding, and the one on which we principally relied in reaching our earlier conclusion, explicitly establishes an interest-analysis approach: “The law of the jurisdiction having the greatest interest in the litigation will be applied....” Schultz, 65 N.Y.2d at 197, 491 N.Y.S.2d at 95, 480 N.E.2d at 684 (internal quotation marks and alterations omitted). As we pointed out in AmEx, interest analysis is a “flexible approach intended to give controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.” AmEx, 672 F.3d at 157–58 (quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72, 595 N.Y.S.2d 919, 922, 612 N.E.2d 277, 280 (1993) (intermediate citation to Second Circuit authority omitted)).

Under Schultz, the interest analysis is applied differently depending on whether the rules in question are conduct-regulating rules that “people use as a guide to governing their primary conduct,” or loss-allocating rules that “prohibit, assign, or limit liability after the tort occurs.” AmEx, 672 F.3d at 158 (internal quotation marks omitted).

All parties and we agree that the law with which we are dealing is “conduct regulating.” And as we further observed in AmEx, “[i]f conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the [allegedly tortious acts] occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders.” AmEx, 672 F.3d at 158 (quoting Cooney, 81 N.Y.2d at 72, 595 N.Y.S.2d at 922, 612 N.E.2d at 280) (intermediate citation to Second Circuit authority omitted).³ As we concluded in AmEx, “New York, not Israel, has the stronger interest in regulating the conduct of New York-based banks operating in New York.” Id.

It seems to be without question that the conduct of AmEx that appellants allege was tortious occurred in New York. New York has the greatest interest in regulating conduct within its borders, and consequently its law applies.

We think that in Bank of China, the Appellate Division misapplied the Schultz rule by failing to give effect to the distinction between the two different kinds of tort-law rules for choice-of-law purposes. It cited Schultz for the proposition that “[w]here a defendant's negligent conduct occurs in one jurisdiction and the plaintiff suffers injuries in another, ‘the place of the wrong is considered to be the place where the last event necessary to make the actor liable occurred,’ that is, ‘where the plaintiffs'...