Peterson v. Islamic Republic Iran

• Decision Date: 09 July 2014
• Docket Number: No. 13–2952–CV.,13–2952–CV.
• Parties: Deborah D. PETERSON, et al., Plaintiffs–Appellees, v. ISLAMIC REPUBLIC OF IRAN, et al., Defendants–Appellants.
• Court: U.S. Court of Appeals — Second Circuit

758 F.3d 185

Deborah D. PETERSON, et al., Plaintiffs–Appellees,

v.ISLAMIC REPUBLIC OF IRAN, et al., Defendants–Appellants.^*

No. 13–2952–CV.

United States Court of Appeals,

Second Circuit.

Argued: May 19, 2014.

Decided: July 9, 2014.

James P. Bonner, Stone Bonner & Rocco LLP, New York, N.Y. (Liviu Vogel, Salon Marrow Dyckman Newman & Broudy LLP, New York, N.Y.; Patrick L. Rocco, Susan M. Davies, Stone Bonner & Rocco LLP, New York, N.Y., Curtis C. Mechling, James L. Bernard, Benjamin Weathers–Lowin, Monica Hanna, Stroock & Stroock & Lavan LLP, New York, N.Y.; Richard M. Kremen, Dale K. Cathell, Timothy H. Birnbaum, DLA Piper US LLP, Baltimore, MD; Suzelle M. Smith, Dan Howarth, Howarth & Smith (LA), Los Angeles, CA; Keith Martin Fleischman, Fleischman Law Finn, New York, N.Y.; John W. Karr, Karr & Allison, P.C., Washington, DC; Noel J. Nudelman, Heideman Nudelman & Kalik, P.C., Washington, DC; Robert J. Tolchin, The Berkman Law Office, LLC, Brooklyn, N.Y., on the brief), for Plaintiffs–Appellees and Third Party Defendants–Appellees.

Andreas A. Frischknecht (David M. Lindsey, on the brief), Chaffetz Lindsey LLP, New York, N.Y., for Defendants–Appellants.

Before: WINTER, WALKER, and CABRANES, Circuit Judges.

JOHN M. WALKER, JR., Circuit Judge:

To satisfy terrorism-related judgments against Iran, the district court (Forrest, J.) awarded turnover of $1.75 billion in assets under both the Terrorism Risk Insurance Act of 2002 (“TRIA”) and a statute enacted specifically to address the assets at issue in this case, 22 U.S.C. § 8772. Although Iran argues that the TRIA ownership requirements have not been satisfied, we need not reach this issue in light of Congress's enactment of § 8772. Iran concedes that the statutory elements for turnover of the assets under § 8772 have been satisfied, and we reject Iran's arguments that § 8772 conflicts with the Treaty of Amity between the United States and Iran, violates separation of powers, and effects an unconstitutional taking. We also conclude that the district court did not abuse its discretion in issuing an anti-suit injunction to protect its judgment. We AFFIRM.

BACKGROUND

Plaintiffs-appellees are the representatives of hundreds of Americans killed in multiple Iran-sponsored terrorist attacks, and they have billions of dollars in unpaid compensatory damages judgments against Iran stemming from these attacks.¹ Defendant-appellant Bank Markazi is the Central Bank of Iran, which is wholly owned by the Iranian government. The assets at issue in this appeal are $1.75 billion in cash proceeds of government bonds, currently held in New York by defendant Citibank, N.A., in an omnibus account for defendant Clearstream Banking, S.A., a financial intermediary. One of the customers for whom Clearstream maintains this account is defendant Banca UBAE S.p.A., an Italian bank whose customer, in turn, is Bank Markazi. Bank Markazi concedes that through this chain of parties it has at least a “beneficial interest” in the assets at issue. Plaintiffs seek turnover of these assets to satisfy their judgments.

When plaintiffs first learned of Bank Markazi's interest in the assets in 2008, they obtained restraints against transfer of the assets. In 2010, plaintiffs initiated this action against Bank Markazi, UBAE, Clearstream, and Citibank to obtain turnover of the assets under section 201(a) of the TRIA, which provides that “in every case in which a person has obtained a judgment against a terrorist party ... the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment.” Terrorism Risk Insurance Act of 2002, Pub L. No. 107–297, § 201(a), 116 Stat. 2322, 2337 (codified at 28 U.S.C. § 1610 Note “Satisfaction of Judgments from Blocked Assets of Terrorists, Terrorist Organizations, and State Sponsors of Terrorism”).

In February 2012, while this action was pending, President Obama issued Executive Order 13,599, which stated:

[I]n light of the deceptive practices of [Bank Markazi] ... to conceal transactions of sanctioned parties.... [a]ll property and interests in property of the Government of Iran, including [Bank Markazi], that are in the United States ... or that are or hereafter come within the possession or control of any United States person ... are blocked....

Exec. Order No. 13,599, 77 Fed.Reg. 6659, 6659 (Feb. 5, 2012). The assets at issue (which were still under restraint) were blocked based on this Executive Order. Plaintiffs then filed a motion for partial summary judgment on their TRIA claim.

In August 2012, while that motion was pending, Congress passed the Iran Threat Reduction and Syria Human Rights Act of 2012. That Act included a section, codified at 22 U.S.C. § 8772, which stated that “the financial assets that are identified in and the subject of proceedings in the United States District Court for the Southern District of New York in Peterson et al. v. Islamic Republic of Iran et al., Case No. 10 Civ. 4518” “shall be subject to execution ... in order to satisfy any judgment to the extent of any compensatory damages awarded against Iran for damages for personal injury or death caused by an act of [terrorism].” Pub.L. 112–158, § 502, 126 Stat. 1214, 1258. Plaintiffs then filed a supplemental motion for summary judgment under § 8772.

In March 2013, the district court granted summary judgment to plaintiffs, ordering turnover of the assets on the two independent bases of TRIA section 201(a) and 22 U.S.C. § 8772. Peterson v. Islamic Republic of Iran, No. 10 Civ. 4518, 2013 WL 1155576 (S.D.N.Y. Mar. 13, 2013). In July 2013, the district court issued an order directing turnover of the blocked assets and enjoining the parties from initiating a claim to the assets in another jurisdiction. Peterson v. Islamic Republic of Iran, No. 10 Civ. 4518 (S.D.N.Y. July 9, 2013), ECF No. 463. Post-judgment, plaintiffs settled with Clearstream and UBAE, and Citibank is a neutral stakeholder, leaving Bank Markazi as the sole appellant.

DISCUSSION

“We review de novo a district court's grant of summary judgment, construing the evidence in the light most favorable to the non-movant, asking whether there is a genuine dispute as to any material fact and whether the movant is entitled to judgment as a matter of law.” Padilla v. Maersk Line, Ltd., 721 F.3d 77, 81 (2d Cir.2013) (citing Fed.R.Civ.P. 56(a)). “We [also] review de novo the district court's legal conclusions, including those interpreting and determining the constitutionality of a statute,” United States v. Stewart, 590 F.3d 93, 109 (2d Cir.2009), or involving the “interpretation of a treaty,” Swarna v. Al–Awadi, 622 F.3d 123, 132 (2d Cir.2010).

Bank Markazi argues that the assets at issue are not “assets of” Bank Markazi as required for turnover under TRIA section 201(a), and that even if the assets were held to be “assets of” Bank Markazi, then they would be “the property ... of a foreign central bank ... held for its own account” and thus “immune from attachment and from execution” under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1611(b)(1). We need not resolve this dispute under the TRIA, however, as Congress has changed the law governing this case by enacting 22 U.S.C. § 8772. Bank Markazi concedes that plaintiffs have satisfied the statutory elements of their § 8772 claim but argues that turnover under this provision (1) conflicts with the Treaty of Amity between the United States and Iran; (2) violates separation of powers under Article III; and (3) violates the Takings Clause. As we explain below, none of these arguments has merit. We also reject Bank Markazi's challenge to the district court's anti-suit injunction.

I. Treaty of Amity

Bank Markazi argues that turnover of the assets under § 8772 would conflict with obligations of the United States under the Treaty of Amity, which is a self-executing treaty between the United States and Iran that was signed in 1955. Treaty of Amity, Economic Relations and Consular Rights between the United States and Iran, Aug. 15, 1955, 8 U.S.T. 899; see also McKesson Corp. v. Islamic Republic of Iran, 539 F.3d 485, 488 (D.C.Cir.2008) (“The Treaty of Amity, like other treaties of its kind, is self-executing.”). But even if there were a conflict, the later-enacted § 8772 would still apply: “The Supreme Court has held explicitly that legislative acts trump treaty-made international law, stating that ‘when a statute which is subsequent in time [to a treaty] is inconsistent with a treaty, the statute to the extent of conflict renders the treaty null.’ ” United States v. Yousef, 327 F.3d 56, 110 (2d Cir.2003) (alteration in original) (quoting Breard v. Greene, 523 U.S. 371, 376, 118 S.Ct. 1352, 140 L.Ed.2d 529 (1998)); see also Whitney v. Robertson, 124 U.S. 190, 194, 8 S.Ct. 456, 31 L.Ed. 386 (1888) ( “By the constitution, a treaty is placed on the same footing, and made of like obligation, with an act of legislation.... [and] if the two are inconsistent, the one last in date will control the other.”). Indeed, when Iran raised a similar argument against turnover under TRIA section 201(a) in a different case, we concluded that even if this provision conflicted with the Treaty of Amity, “the TRIA would have to be read to abrogate that portion of the Treaty.” Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 53 (2d Cir.2010).²

In any event, we see no conflict between § 8772 and the Treaty of Amity. Bank Markazi first contends that Congress's inclusion of Bank Markazi in its definition of “Iran” in § 8772(d)(3) violates Article III.1 of the Treaty, which states that Iranian companies “shall have their juridical status recognized within” the United States. But as Bank Markazi acknowledges, this argument has been rejected by our Court in the context of a similar provision in the TRIA. See Weinstein, 609 F.3d at 53 (concluding that Iran's argument was foreclosed by the Supreme Court's...