Rubin v. Islamic Republic of Iran

• Decision Date: 19 July 2016
• Docket Number: No. 14-1935,14-1935
• Citation: 830 F.3d 470
• Parties: Jenny Rubin, et al., Plaintiffs-Appellants, v. Islamic Republic of Iran, Defendant-Appellee, and Field Museum of Natural History, et al., Respondents-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

830 F.3d 470

Jenny Rubin, et al., Plaintiffs-Appellants

v. Islamic Republic of Iran, Defendant-AppelleeandField Museum of Natural History, et al., Respondents-Appellees.

No. 14-1935

United States Court of Appeals, Seventh Circuit.

Argued April 23, 2015

Decided July 19, 2016

Asher Perlin, Florida Professional Law Group, PLLC, Hollywood, FL, for Plaintiffs-Appellants.

Jeffrey A. Lamken, Mololamken LLP, Thomas G. Corcoran, Jr., Berliner, Corcoran & Rowe, Martin Totaro, Securities and Exchange Commission, Washington, DC, for Defendant-Appellee.

Susan M. Benton, Greensfelder, Hemker & Gale, P.C., Chicago, IL, William P. Ferranti, The Ferranti Firm LLC, Portland, OR, for Respondent-Appellee Field Museum of Natural History.

Matthew G. Allison, Baker & Mckenzie LLP, Chicago, IL, for Respondent-Appellee University of Chicago, Oriental Institute.

Benjamin M. Shultz, Sharon Swingle, Department of Justice, Washington, DC, for United States of America, Amicus Curiae.

Before Bauer and Sykes, Circuit Judges, and Reagan, Chief District Judge.^*

Sykes, Circuit Judge.

In September 1997 three Hamas suicide bombers blew themselves up on a crowded pedestrian mall in Jerusalem. Among those grievously injured were eight U.S. citizens who later joined with a handful of their close relatives to file a civil action against the Islamic Republic of Iran for its role in providing material support to the attackers. Iran was subject to suit as a state sponsor of terrorism under the terrorism exception to the Foreign Sovereign Immunities Act (“FSIA”), then codified at 28 U.S.C. § 1605(a)(7). A district judge in the District of Columbia entered a $71.5 million default judgment. Iran did not pay.

So began more than a decade of unsuccessful litigation across the country to attach and execute on Iranian assets in order to satisfy the judgment. See Rubin v. Islamic Republic of Iran , No. Civ. A. 01–1655, 2005 WL 670770, at *1 D.D.C. Mar. 23, 2005, vacated , 563 F.Supp.2d 38 (D.D.C. 2008) (granting and then vacating writs of execution against two domestic bank accounts used by Iranian consulates); Rubin v. Islamic Republic of Iran , 810 F.Supp.2d 402 (D. Mass. 2011), aff'd , 709 F.3d 49 (1st Cir. 2013) (rejecting an effort to attach Iranian antiquities in the possession of various museums); Rubin v. Islamic Republic of Iran , 33 F.Supp.3d 1003 (N.D. Ill. 2014) (same). This appeal concerns the last decision on this list.

The plaintiffs sought to execute on four collections of ancient Persian artifacts located within the territorial jurisdiction of the Northern District of Illinois: the Persepolis Collection, the Chogha Mish Collection, and the Oriental Institute Collection, all in the possession of the University of Chicago; and the Herzfeld Collection, split between the University and Chicago's Field Museum of Natural History. The case was last here on some procedural issues early in the attachment proceeding. See Rubin v. Islamic Republic of Iran , 637 F.3d 783 (7th Cir. 2011), cert. denied , ––– U.S. ––––, 133 S.Ct. 23, 183 L.Ed.2d 692 (2012). It now returns on the merits.

A foreign state's property in the United States is immune from attachment and execution, see 28 U.S.C. § 1609, but there are a few narrow exceptions. The plaintiffs identified three possible paths to reach the artifacts: subsections (a) and (g) of 28 U.S.C. § 1610, both part of the FSIA; and section 201 of the Terrorism Risk Insurance Act of 2002 (“TRIA”), Pub. L. No. 107-297, 116 Stat. 2322 (codified at 28 U.S.C. § 1610 note), which permits holders of terrorism-related judgments to execute on assets that are “blocked” by executive order under certain international sanctions provisions. The district court entered judgment against the plaintiffs, finding no statutory basis to execute on the artifacts.

We affirm. The assets are not blocked by existing executive order, so execution under TRIA is not available. Nor does § 1610(a) apply. That provision permits execution on a foreign state's property “used for a commercial activity in the United States.” We read this exception to require commercial use by the foreign state itself, not a third party. Iran did not put the artifacts to any commercial use.

Lastly, § 1610(g) is not itself an exception to execution immunity. Instead, it partially abrogates the so-called Bancec doctrine, which holds that a judgment against a foreign state cannot be executed on property owned by its juridically separate instrumentality.

First Nat'l City Bank v. Banco Para El Comercio Exterior de Cuba (“Bancec ”), 462 U.S. 611, 626–29, 103 S.Ct. 2591, 77 L.Ed.2d 46 (1983). The Bancec rule can be overcome in two ways: The holder of a judgment against a foreign state may execute on the property of its instrumentality if the sovereign and its instrumentality are alter egos or if adherence to the rule of separateness would work an injustice. Id .

Section 1610(g) lifts the Bancec rule for holders of terrorism-related judgments, allowing attachment in aid of execution “as provided in this section” without regard to the presumption of separateness—that is, without the requirement of establishing alter-ego status or showing an injustice. The phrase “as provided in this section” refers to the immunity exceptions found elsewhere in § 1610, one of which must apply to overcome execution immunity. So although subsection (g) substantially eases the enforcement process for terrorism victims by removing the Bancec barrier, it is not a freestanding terrorism exception to execution immunity.

I. Background

The artifacts at issue here arrived in the United States over a 60-year timespan beginning in the 1930s. In 1937 Iran loaned the Persepolis Collection—roughly 30,000 clay tablets and fragments containing some of the oldest writings in the world—to the University of Chicago's Oriental Institute for research, translation, and cataloguing. In 1945 the Field Museum purchased a collection of approximately 1,200 prehistoric artifacts from Dr. Ernst Herzfeld, a German archaeologist active in Persia in the early 20th century (the Herzfeld Collection). In the 1960s Iran excavated clay seal impressions from the ancient Chogha Mish settlement and loaned them to the University's Oriental Institute for academic study (the Chogha Mish Collection). Most items in this collection were returned to Iran in 1970, but the University has since located some objects previously missing from the collection. In the 1980s and 1990s, the Oriental Institute received several small donations of Persian artifacts from Iran and other donors. These artifacts are not really a discrete collection, but the parties refer to them as the “Oriental Institute Collection,” so we'll do the same.

The plaintiffs are American victims of a suicide-bomb attack carried out by Hamas in Jerusalem on September 4, 1997, with material support from Iran. In 2003 the survivors and their close family members filed suit against Iran in federal court in the District of Columbia, proceeding under the terrorism exception to jurisdictional sovereign immunity, then codified at § 1605(a)(7) of the FSIA. (In January 2008 Congress repealed § 1605(a)(7) and enacted a new terrorism exception to jurisdictional sovereign immunity codified at 28 U.S.C. § 1605A. See National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 1083, 122 Stat. 3, 338–44.)

The plaintiffs won a $71.5 million default judgment, see Campuzano v. Islamic Republic of Iran , 281 F.Supp.2d 258 (D.D.C. 2003), and quickly commenced enforcement actions around the country in an effort to collect. As relevant here, the plaintiffs registered the judgment in the Northern District of Illinois, initiating attachment proceedings for the purpose of executing on the four collections then in the possession of the University and the Field Museum.¹ (We'll refer to the University and the Field Museum collectively as “the Museums” unless the context requires otherwise.)

Significant procedural battles ensued. We resolved these disputes in our earlier opinion and need not repeat that litigation history. See Rubin , 637 F.3d at 786–89. For present purposes it's enough to note that the plaintiffs initially proposed two possible ways to overcome Iran's execution immunity. First, they invoked § 1610(a), the “commercial activity” exception to execution immunity. Second, they pointed to TRIA, which permits execution on the blocked assets of a state sponsor of terrorism (or its agency or instrumentality) to satisfy a judgment obtained under the terrorism exception to jurisdictional sovereign immunity.

After we sent the case back to the district court, the parties engaged in discovery on the four collections, and Iran and the Museums moved for summary judgment. The district judge granted the motion. First, he rejected the plaintiffs' claim that the artifacts are subject to execution under § 1610(a). The judge read this exception as limited to property used for a commercial activity by the foreign state itself . Because Iran hadn't used the artifacts for commercial activity, the judge held that § 1610(a) does not apply.

The judge also held that because the assets in question are not blocked—i.e., frozen—by any current executive order, execution under TRIA is likewise unavailable.

Finally, in their response to the summary-judgment motion, the plaintiffs identified a third possible path to reach the artifacts: § 1610(g), which they argued is an independent exception to execution immunity available to victims of state-sponsored terrorism. The judge rejected this argument too, concluding that subsection (g) abrogates the Bancec rule for terrorism-related judgments but is not a freestanding terrorism exception to execution immunity.

Finding no statutory basis to execute on the artifacts, the judge entered judgment for Iran and the Museums. The plaintiffs appealed, reprising all three arguments.

II. Discussion

A. Which Artifacts Remain at Issue?

Our first task is to identify which of the four collections is...