Abecassis v. Wyatt, Civil Action No. H-09-3884.

CourtUnited States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
Writing for the CourtLEE H. ROSENTHAL
PartiesOdelia ABECASSIS, et al., Plaintiffs,v.Oscar S. WYATT, Jr., et al., Defendants.
Docket NumberCivil Action No. H-09-3884.
Decision Date31 March 2010

704 F.Supp.2d 623

Odelia ABECASSIS, et al., Plaintiffs,
v.
Oscar S. WYATT, Jr., et al., Defendants.

Civil Action No. H-09-3884.

United States District Court,
S.D. Texas,
Houston Division.

March 31, 2010.


704 F.Supp.2d 624

COPYRIGHT MATERIAL OMITTED

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COPYRIGHT MATERIAL OMITTED

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David J. Dickens, Michael J. Miller, The Miller Law Firm, Orange, VA, Bena Ochs, Gavriel Mairone, Chicago, IL, Raul Herman Suazo, Martin Disiere et al., Houston, TX, for Plaintiffs.

Stephen Winston Grafman, Sharp & Associates, Stephen M. McNabb, Caroline M. Mew, Fulbright & Jaworski, L.L.P., Washington, DC, Carl A. Parker, Parker Law Firm, Port Arthur, TX, Don Chapple Nelson, Attorney at Law, Anne M. Rodgers, William R. Pakalka, Layne Kruse, Fulbright & Jaworski LLP, David S. Toy, Francis I. Spagnoletti, Spagnoletti and Company, Houston, TX, for Defendants.
MEMORANDUM AND ORDER
LEE H. ROSENTHAL, District Judge.

This suit arises out of terrorist attacks in Israel between 2000 and 2003. Most were suicide bombings; some involved such acts as opening fire on civilians or remotely triggering explosives in crowded public places. The plaintiffs or their family

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members were wounded or killed in these attacks. Some of the victims were Americans.

The defendants are companies and individuals involved in the oil business. The plaintiffs allege that these defendants purchased oil from Iraq-either directly from Saddam Hussein's government or from third parties who had purchased the oil from Hussein-and made payments that violated the United Nations Oil-for-Food Program. The Oil-for-Food Program required anyone buying oil from Iraq to pay the purchase money into an escrow account monitored by the United Nations. Funds from this account could only be used for humanitarian purposes. The plaintiffs allege that the defendants were involved in buying Iraqi oil with payments that included illegal kickbacks to a secret bank account in Jordan controlled by Hussein. The plaintiffs allege that Hussein used funds from this account to make reward payments to the families of the suicide bombers and others killed in carrying out the terrorist attacks. According to the plaintiffs, such payments were important to recruiting terrorists.

All 193 plaintiffs allege violations of the Torture Victims Protection Act (“TVPA”).1 Most of the plaintiffs are aliens. They assert that this court has subject-matter jurisdiction under the Alien Tort Statute (“ATS”), 2 which permits aliens to sue for some violations of customary international law. The plaintiffs allege that the defendants violated international law by financing terrorism and by aiding and abetting and conspiring to commit acts of genocide and crimes against humanity. The plaintiffs who are United States nationals and their estates, survivors, and heirs allege that the defendants violated the Antiterrorism Act (“ATA”) 3 by providing material support to terrorist organizations and by engaging in illegal financial transactions with Iraq. (Docket Entry No. 3).

The following motions are pending:

• The El Paso Corporation has moved to dismiss under Rule 12(b)(1) for lack of standing, under Rule 12(b)(5) for improper service of process, and under Rule 12(b)(6) for failure to state a claim on the merits of any of the plaintiffs' causes of action. (Docket Entry No. 26). The plaintiffs have responded, (Docket Entry No. 42), and El Paso has replied, (Docket Entry No. 47). El Paso also filed a notice of supplemental authority, (Docket Entry No. 51). After the case was transferred to this court, El Paso filed a supplement with Fifth Circuit authority, (Docket Entry No. 78), to which the plaintiffs responded, (Docket Entry No. 81).
• Oscar Wyatt has moved to dismiss for lack of standing under Rule 12(b)(1) and for failure to state a claim under Rule 12(b)(6). (Docket Entry No. 72). The plaintiffs have responded, (Docket Entry No. 98), and Wyatt has replied, (Docket Entry No. 105).
• NuCoastal Corporation has moved to dismiss on the same bases as Wyatt. (Docket Entry No. 74). The plaintiffs have responded, (Docket Entry No. 99), and Wyatt has replied, (Docket Entry No. 107).
• Bayoil (USA), Inc. and David Chalmers have also moved to dismiss under Rule 12(b)(1) for lack of standing and under
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Rule 12(b)(6) for failure to state a claim. (Docket Entry No. 76). The plaintiffs have responded, (Docket Entry No. 97), and Bayoil and Chalmers have replied, (Docket Entry No. 108).

Based on the motions, responses, and replies; the allegations in the complaint; the record; the arguments of counsel; and the applicable law, this court grants the motions to dismiss for lack of standing except with respect to the ATA claims and grants all the motions to dismiss for failure to state a claim. The plaintiffs may amend their complaint to replead only the ATA claims by April 23, 2010. The remaining allegations are dismissed with prejudice and leave to amend is denied as futile.

The reasons for these rulings are explained in detail below.


I. The Allegations in the ComplaintA. The Iraq Oil-for-Food Program

Less than a week after Saddam Hussein invaded Kuwait on August 6, 1990, the United Nations issued economic sanctions precluding member states from buying Iraqi oil. (Docket Entry No. 3, ¶ 145). The U.N. did not lift the sanctions for five years. On March 3, 1995, the Houston Chronicle published a story under the headline “Not Yet; U.N. Sanctions Against Iraq Can't be Safely Ended.” The article stated that Iraq “continues to aid and abet terrorists” by cheating the U.N. on the sanctions with the “connivance of Western oil traders that allow [Hussein] to get away with it, selling bargain-basement oil in order to rearm his troops and sustain the luxury that he and his supporters enjoy.” ( Id., ¶ 66).

On April 14, 1995, the U.N. Security Council adopted Resolution 986, lifting the embargo but restricting Iraq's ability to sell its oil. Iraq's government and the U.N. negotiated the details of the restrictions, resulting in a written agreement sometime in May 1996. This agreement led to the U.N. Oil-For-Food Program (“OFP”). Under the OFP, a new U.N. office was created to oversee Iraq's sale of oil and purchase of humanitarian goods. An escrow account was established at the New York branch of the Banque Nacionale de Paris (“BNP”). The proceeds of Iraqi oil sales were to be deposited into the escrow account, which the U.N. monitored. Iraq could use the funds only to purchase food and other humanitarian goods for the country. ( Id., ¶¶ 152, 154). The United States government allowed American individuals and companies to enter into executory contracts with Iraq to purchase oil or sell humanitarian goods, including food and medical supplies. Before they could perform these contracts, the American entities were required to obtain a license from the Treasury Department's Office of Foreign Assets Control (“OFAC”). OFAC evaluated these license applications in conjunction with the State and Commerce Departments and the U.N. committee responsible for overseeing the PNB account. OFAC issued 1,050 licenses. ( Id., ¶¶ 155-60).

In December 1996, Iraq began selling oil through the OFP. Under the OFP, even though buyers sent the purchase money to the BNP account in New York, Saddam Hussein's government retained the right to choose the buyers. Those selected had to purchase the oil at the Official Selling Price (“OSP”), which was determined by a U.N. committee made up of representatives of the Security Council member states. The plaintiffs alleged that the U.N. “sought to set a price for Iraqi oil at the highest rate bearable by the market in order to maximize the revenue generated,” which “would increase the amount of humanitarian goods that could be purchased” and “minimize the potential for illegal kickbacks” to Saddam Hussein. Presumably, buyers already paying full market

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price would be unable or unwilling to pay more in kickbacks. ( Id., ¶¶ 161-62).

The plaintiffs allege that many of the companies and individuals Iraq chose to receive “allocations” of Iraqi oil “were not otherwise involved in the oil industry [and] were able to reap large profits by selling their allocations of Iraqi oil to brokers and/or companies capable of transporting the oil to a refinery.” ( Id., ¶ 162). Beginning in 2000, the plaintiffs allege, Iraqi officials conditioned oil allocations on the buyer's willingness to pay a “surcharge” to Hussein's government. These surcharges, calculated as a percentage of the total contract price, were not permitted under OFP. The buyers paid these surcharges to “front companies” or bank accounts Hussein controlled. The plaintiffs also allege that Hussein charged “port fees” before allowing tankers to receive oil at Iraqi ports. Like the surcharges, the port fees were paid to Hussein instead of the OFP bank account. The plaintiffs allege that these surcharges and port fees were kickbacks made possible by lobbying efforts persuading the U.N. to select a below-market OSP. The plaintiffs also allege that at least some of the cost of these kickbacks was passed on by the direct purchasers to the next purchaser down the line. ( Id., ¶¶ 163-77).


B. The Defendants' Actions

Oscar Wyatt, a Texas oil trader, was the Chairman and sole shareholder of Coastal Corporation. Wyatt later formed NuCoastal Corporation, a Houston energy company, and NuCoastal Trading, S.A., a Panama corporation. Both NuCoastal entities are also defendants. The plaintiffs allege that on the day Iraq invaded Kuwait, Wyatt owed Iraq $90 million. After the U.N. sanctions froze Iraq's bank accounts, Wyatt began repaying the money directly to the Hussein government and not to the U.N.-controlled accounts. The payments allegedly amounted to more than $50 million. Wyatt allegedly made the payments through dummy companies he controlled in Switzerland and Cyprus using two associates who are not named as defendants. ( Id....

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  • Gill v. Arab Bank, PLC, No. 11–CV–3706.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • October 17, 2012
    ...2333(a) claim. Raised by the civil remedy provision are a variety of serious interpretive questions. See generally Abecassis v. Wyatt, 704 F.Supp.2d 623, 656–66 (S.D.Tex.2010) (collecting cases and summarizing the different approaches applied by courts). The issues raised in this case requi......
  • Ofisi v. BNP Paribas, S.A., Civil Action No. 15–2010 (JDB)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • September 29, 2017
    ...by providing routine financial services to charity organizations alleged to provide funds to terrorist groups); Abecassis v. Wyatt, 704 F.Supp.2d 623, 666 (S.D.Tex.2010) (plaintiffs failed to allege that kickbacks given to Iraq proximately caused plaintiffs' injuries in a Hamas bombing in I......
  • Gill v. Arab Bank, PLC, 11-CV-3706
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • October 15, 2012
    ...2333(a) claim. Raised by the civil remedy provision are a variety of serious interpretive questions. See generally Abecassis v. Wyatt, 704 F. Supp. 2d 623, 656-66 (S.D. Tex. 2010) (collecting cases and summarizing the different approaches applied by courts). The issues raised in this case r......
  • Estate of Parsons v. Palestinian Auth., No. 10-7085
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • August 5, 2011
    ...that the donee plans to commit terrorist acts against U.S. citizens." Id. at 725 (Wood, J., dissenting); see also Abecassis v. Wyatt, 704 F. Supp. 2d 623, 664-65 (S.D. Tex. 2010) ("[I]t is not enough [that provider of material support orPage 20resources] know the character of the ultimate [......
  • Request a trial to view additional results
26 cases
  • Gill v. Arab Bank, PLC, No. 11–CV–3706.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • October 17, 2012
    ...2333(a) claim. Raised by the civil remedy provision are a variety of serious interpretive questions. See generally Abecassis v. Wyatt, 704 F.Supp.2d 623, 656–66 (S.D.Tex.2010) (collecting cases and summarizing the different approaches applied by courts). The issues raised in this case requi......
  • Ofisi v. BNP Paribas, S.A., Civil Action No. 15–2010 (JDB)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • September 29, 2017
    ...by providing routine financial services to charity organizations alleged to provide funds to terrorist groups); Abecassis v. Wyatt, 704 F.Supp.2d 623, 666 (S.D.Tex.2010) (plaintiffs failed to allege that kickbacks given to Iraq proximately caused plaintiffs' injuries in a Hamas bombing in I......
  • Gill v. Arab Bank, PLC, 11-CV-3706
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • October 15, 2012
    ...2333(a) claim. Raised by the civil remedy provision are a variety of serious interpretive questions. See generally Abecassis v. Wyatt, 704 F. Supp. 2d 623, 656-66 (S.D. Tex. 2010) (collecting cases and summarizing the different approaches applied by courts). The issues raised in this case r......
  • Estate of Parsons v. Palestinian Auth., No. 10-7085
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • August 5, 2011
    ...that the donee plans to commit terrorist acts against U.S. citizens." Id. at 725 (Wood, J., dissenting); see also Abecassis v. Wyatt, 704 F. Supp. 2d 623, 664-65 (S.D. Tex. 2010) ("[I]t is not enough [that provider of material support orPage 20resources] know the character of the ultimate [......
  • Request a trial to view additional results

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