Rubin v. the Islamic Republic of Iran

• Decision Date: 06 June 2011
• Docket Number: No. 08–2805.,08–2805.
• Citation: 637 F.3d 783
• Parties: Jenny RUBIN, et al., Plaintiffs–Appellees,andDeborah D. Peterson, et al., Intervenors–Appellees,v.THE ISLAMIC REPUBLIC OF IRAN, Defendant–Appellant,andField Museum of Natural History and University of Chicago, the Oriental Institute, Intervenors.
• Court: U.S. Court of Appeals — Seventh Circuit

637 F.3d 783

Jenny RUBIN, et al., Plaintiffs–Appellees,andDeborah D. Peterson, et al., Intervenors–Appellees,

v.THE ISLAMIC REPUBLIC OF IRAN, Defendant–Appellant,andField Museum of Natural History and University of Chicago, the Oriental Institute, Intervenors.

No. 08–2805.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 26, 2009.Decided March 29, 2011.As Corrected April 1, 2011.Rehearing and Rehearing En Banc Denied June 6, 2011.*

David J. Strachman (argued), Attorney, McIntyre, Tate, Lynch & Holt, Providence, RI, for Plaintiffs–Appellees.Thomas G. Corcoran, Jr. (argued), Attorney, Berliner, Corcoran & Rowe, Washington, DC, for Defendant–Appellant.David J. Cook (argued), Attorney, Cook Collection Attorneys, San Francisco, CA, for Intervenor–Appellee.Susan M. Benton, Attorney, William P. Ferranti (argued), Attorney, Winston & Strawn LLP, Matthew G. Allison, Attorney, Baker & McKenzie, Chicago, IL, for Intervenors–Appellants.Sharon Swingle (argued), Attorney, Department of Justice, Civil Division, Appellate Staff, for Amicus Curiae.

Before BAUER and SYKES, Circuit Judges, and SIMON, District Judge.^**

SYKES, Circuit Judge.

The Islamic Republic of Iran appeals two orders issued in connection with a long-running effort to collect on a large judgment entered against it for its role in a 1997 terrorist attack. The plaintiffs are American citizens who were injured in a brutal suicide bombing in Jerusalem, Israel, carried out by Hamas with the assistance of Iranian material support and training. The victims obtained a $71 million default judgment against Iran in federal district court in Washington, D.C., and then registered that judgment in the Northern District of Illinois for the purpose of attaching two collections of Persian antiquities owned by Iran but on long-term academic loan to the University of Chicago's Oriental Institute. They also sought to attach a third collection of Persian artifacts owned by Chicago's Field Museum of Natural History. They contend that this collection, too, belongs to Iran but was stolen and smuggled out of the country in the 1920s or 1930s and later sold to the museum. Iran's appeal requires us to consider the scope and operation of § 1609 of the Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. §§ 1330(a), 1602–1611, which provides that a foreign state's property in the United States is immune from attachment unless a specific statutory exception to immunity applies.

The district court held that the immunity codified in § 1609 is an affirmative defense personal to the foreign sovereign and must be specially pleaded. Because Iran had not appeared in the attachment proceeding, this ruling had the effect of divesting the collections of their statutory immunity unless Iran appeared and affirmatively asserted it. So Iran appeared and made the immunity claim. In response the served Iran with requests for discovery regarding all Iranian-owned assets located anywhere in the United States. Not surprisingly, Iran resisted, maintaining that such far-flung and open-ended discovery about its American-based property was inconsistent with the FSIA. The district court disagreed and ordered general-asset discovery to proceed. Iran appealed.

The district court's discovery order effectively rejected Iran's claim of sovereign immunity and is therefore immediately appealable under the collateral-order doctrine. The court's earlier order, which denied § 1609 immunity in the absence of an appearance by the foreign state, is also properly before this court. That order raises closely related questions about sovereign-property immunity and is revived for review by Iran's interlocutory appeal of the general-asset discovery order.

Both orders are seriously flawed; we reverse. The district court's approach to this case cannot be reconciled with the text, structure, and history of the FSIA. Section 1609 of the Act provides that “the property in the United States of a foreign state shall be immune from attachment” unless an enumerated exception applies. (Emphasis added.) This section codifies the longstanding common-law principle that a foreign state's property in the United States is presumed immune from attachment. This presumptive immunity, when read with other provisions of the FSIA, requires the plaintiff to identify the specific property he seeks to attach; the court cannot compel a foreign state to submit to general discovery about all its assets in the United States. The presumption of immunity also requires the court to determine—sua sponte if necessary —whether an exception to immunity applies; the court must make this determination regardless of whether the foreign state appears.

I. Background

This appeal has its roots in a vicious terrorist attack. On September 4, 1997, Hamas carried out a triple suicide bombing in the crowded Ben Yehuda Street pedestrian mall in Jerusalem. See Campuzano v. Islamic Republic of Iran, 281 F.Supp.2d 258, 261 (D.D.C.2003). Five bystanders were killed and nearly 200 were injured. Hamas claimed responsibility for the bombing, and Israeli police arrested two Hamas operatives who participated in the attack. Id. at 261–62. They and other members of their Hamas cell gave Israeli authorities information about the planning, financing, and execution of this act of terrorism. The two were later convicted of multiple counts of murder and attempted murder. Id.

The plaintiffs here—Jenny Rubin and her mother, Deborah Rubin; Stuart Hersh and his wife, Renay Frym; Noam Rozenman and his parents, Elena and Tzvi Rozenman; Daniel Miller; and Abraham Mendelson—are American citizens who were grievously wounded in the September 4, 1997 bombing or suffered severe emotional and loss-of-companionship injuries as a result of being closely related to those who were physically hurt. These victims filed suit against Iran in federal district court in Washington, D.C., alleging that Iran was responsible for the bombings as a result of the training and support it had provided to Hamas. Id. Jurisdiction was predicated on § 1605(a)(7) (1996) of the FSIA, and the district court consolidated the action with another suit filed by a separate group of victims of the bombing. Id. at 261. Iran was properly served but defaulted. Pursuant to the requirements of § 1608(e) of the FSIA, the district court held a three-day evidentiary hearing before issuing a default judgment against Iran for $71.5 million in compensatory damages.¹ Id. at 272–77.

At this point the plaintiffs faced a problem familiar to Iran's judgment creditors: They had won a significant judgment but enforcement options were limited. A nationwide search for attachable Iranian assets eventually led to Chicago and its rich collection of ancient artifacts housed in the city's major museums. The plaintiffs registered their judgment with the United States District Court for the Northern District of Illinois and served the University of Chicago's Oriental Institute and later the Field Museum of Natural History with a Citation to Discover Assets pursuant to Rule 69(a) of the Federal Rules of Civil Procedure and chapter 735, section 5/2–1402 of the Illinois Compiled Statutes.² The plaintiffs identified three specific collections in the museums' possession that they sought to attach and execute against: the Persepolis and Chogha Mish Collections at the Oriental Institute, and the Herzfeld Collection at the Field Museum.³

The first two are collections of Persian antiquities recovered in excavations in the Iranian city of Persepolis in the 1930s and on the Chogha Mish plain in southwestern Iran in the 1960s. Archaeologists from the University of Chicago led these excavations, and Iran loaned the artifacts to the Oriental Institute for long-term study and to decipher the Elamite writing that appears on some of the tablets included among the discoveries. The terms of the academic loan require the Oriental Institute to return the collections to Iran when study is complete. The Institute says it has finished studying the Chogha Mish Collection and is ready to return it to Iran pending resolution of a claim before the Iran–United States Claims Tribunal in the Hague.⁴ Study of the Persepolis Collection is apparently ongoing, although the Institute says it has returned parts of this collection to Iran.

The third group of artifacts is known as the Herzfeld Collection, after the German archaeologist Ernst Herzfeld who worked on excavations in Persia for 30 years in the early twentieth century. See Wikipedia, Ernst Herzfeld, http:// en. wikipedia. org/ wiki/ Ernst_ Herzfeld (last visited Mar. 10, 2011). The Field Museum purchased a set of prehistoric pottery, metalworks, and ornaments from Herzfeld in 1945. The plaintiffs contest the Field Museum's title; they claim that Iran owns this collection because Herzfeld stole the artifacts and smuggled them out of the country in the 1920s and 1930s. Iran, however, does not claim ownership of the Herzfeld Collection.

The plaintiffs alleged that these three collections are subject to attachment under two provisions in the FSIA: (1) the exception to § 1609 attachment immunity for “property in the United States of a foreign state ... used for a commercial activity” where the underlying judgment “relates to a claim for which the foreign state is not immune,” 28 U.S.C. § 1610(a)(7); and (2) the “blocked assets” provision of the Terrorism Risk Insurance Act of 2002 (“TRIA”), which provides that the blocked assets of a terrorist party or its agency or instrumentality are subject to execution to satisfy a judgment obtained under the FSIA's terrorism exception, Pub.L. No. 107–297, Title II, § 201(a), 116 Stat. 2322, 2337 (2002) (codified at 28 U.S.C. § 1610 note). The museums responded that the collections are immune from attachment under § 1609 of the FSIA and that neither the commercial exception in § 1610(a)(7) nor the “blocked assets” provision of TRIA applies.

The plaintiffs moved...