Estate of Heiser v. Islamic Republic of Iran

Decision Date10 August 2011
Docket Number01–cv–2104 (RCL).,Nos. 00–cv–2329 (RCL),s. 00–cv–2329 (RCL)
Citation807 F.Supp.2d 9
PartiesESTATE OF Michael HEISER, et al., Plaintiffs, v. ISLAMIC REPUBLIC OF IRAN, et al., Defendants.Estate of Millard D. Campbell, et al., Plaintiffs, v. Islamic Republic of Iran, et al., Defendants.
CourtU.S. District Court — District of Columbia

OPINION TEXT STARTS HERE

Mark Charles Del Bianco, Kensington, MD, Richard Marc Kremen, David B. Misler, Melissa Lea Mackiewicz, DLA Piper US, LLP, Baltimore, MD, Shale D. Stiller, Elizabeth Renee Dewey, DLA Peper Rudnick Gray Cary U.S. LLP, Washington, DC, for Plaintiffs.

Neil Keith Gilman, Hunton & Williams, LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

ROYCE C. LAMBERTH, Chief Judge.I. INTRODUCTION

On the night of June 25, 1996, a tanker truck crept quietly along the streets of Dhahran, coming to rest alongside a fence surrounding the Khobar Towers complex, a residential facility housing United States Air Force personnel stationed in Saudi Arabia. A few minutes later, the truck exploded in a massive fireball that was, at the time, the largest non-nuclear explosion ever recorded on Earth. The devastating blast, which was felt up to 20 miles away, sheared the face off Building 131 of the Khobar Towers complex and left a crater more than 85 feet wide and 35 feet deep in its wake. The bombing killed 19 U.S. military personnel and wounded more than 100. Subsequent investigations revealed that members of Hezbollah carried out the attack.

A few years after the bombing, plaintiffs—who are former service members injured in the attack, their families, and estates and family members of those killed—brought suit under the “state-sponsored terrorism” exception to the Foreign Sovereign Immunities Act (FSIA or the Act), then codified at 28 U.S.C. § 1605(a)(7). Plaintiffs allege that the Islamic Republic of Iran (Iran), the Iranian Ministry of Information and Security, and the Iranian Islamic Revolutionary Guard Corps provided material support and assistance to Hezbollah to carry out the heinous attack. Following Iran's failure to appear and plaintiffs' presentation of evidence to substantiate their claims, the Court found that “the Khobar Towers bombing was planned, funded, and sponsored by senior leadership in the government of the Islamic Republic of Iran; the IRGC had the responsibility and worked with Saudi Hizbollah to execute the plan; and the MOIS participated in the planning and funding of the attack.” Heiser v. Islamic Republic of Iran, 466 F.Supp.2d 229, 265 (D.D.C.2006) ( “ Heiser I ”).1 The Court subsequently entered judgment against all defendants for $250 million in compensatory damages. Id. at 356. A few years later, Congress passed the National Defense Authorization Act for Fiscal Year 2008 (“NDAA” or the 2008 Amendments), which replaced § 1605(a)(7) with a new state-sponsored terrorism exception codified at § 1605A, permitted recovery of punitive damages, and added a new provision concerning the enforcement of judgments. Pub.L. No. 110–181, § 1083, 122 Stat. 3, 338–44 (2008). Invoking the NDAA's procedures for retroactive application, in 2009 the Court entered an amended judgment, holding defendants jointly and severally liable for an additional $36 million in compensatory damages and $300 million in punitive damages. Heiser v. Islamic Republic of Iran, 659 F.Supp.2d 20, 31 (D.D.C.2009).

Following entry of final judgment, plaintiffs began their journey down the often-frustrating and always-arduous path shared by countless victims of state-sponsored terrorism attempting to enforce FSIA judgments. The matter before the Court today requires exploration of the latest in a series of attempts by Congress to aid these victims. In this instance, plaintiffs—relying on a new provision added to the FSIA as part of the 2008 Amendments—assert that the Telecommunication Infrastructure Company of Iran (“TIC”) is an instrumentality of Iran, and ask the Court to direct Sprint Communications Company LP (“Sprint”) to turn over funds it owes to TIC. Sprint responds that plaintiff has failed to prove that TIC is an instrumentality as defined by the FSIA, seeks leave to interplead TIC as a defendant, and raises several other legal defenses to attachment of the funds. The Court first reviews the regime of legal and regulatory provisions governing execution of FSIA judgments, and then turns to the parties' dispute.

II. BACKGROUNDA. Statutory and Regulatory Framework

1. Iran–Specific Regulations

Relations between the United States and Iran deteriorated following the 1979 revolution in which Iran's monarchy was displaced by an Islamic republic, ruled by the Ayatollahs, that remains in power today. Following the regime change and fueled by the Iran hostage crisis, President Carter—exercising the authority granted to him under the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq.—blocked the flow of assets between the United States and Iran, and seized Iranian property located within the United States. Executive Order 12170, 44 Fed. Reg. 65,729 (Nov. 14, 1979). Over the next two years, Presidents Carter and Reagan issued numerous Executive Orders seizing additional assets, while the Office of Foreign Assets Control (“OFAC”)—a component of the Department of the Treasury that administers and enforces economic and trade sanctions—promulgated regulations concerning transactions between persons in the United States and Iran. In 1981, the United States and Iran reached an agreement, known as the Algiers Accords, which led to the release of the hostages and the unfreezing of most Iranian assets. Over the following decades, sanctions regimes instituted by Executive Orders and rules promulgated by OFAC evolved into the complex web of regulations governing Iranian assets in the United States, as well as transactions with Iran.2

Today, the basic framework for the treatment of Iranian property and trade with Iran is set forth in two complementary sets of provisions promulgated by OFAC that generally bar all transactions either with Iran or involving Iranian interests and then carve out limited exceptions to that embargo. The first, known as the Iranian Assets Control Regulations (“IACR”) and codified at 31 C.F.R. Part 535, was implemented in 1980 during the Iran Hostage Crisis, 45 Fed. Reg. 24,432 (Apr. 9, 1980), and “broadly prohibits unauthorized transactions involving property in which Iran has any interest,” while granting specific licenses for certain transactions. Flatow v. Islamic Republic of Iran, 305 F.3d 1249, 1255 (D.C.Cir.2002). The second, known as the Iranian Transactions Regulations (“ITR”) and codified at 31 C.F.R. Part 560, “confirms the broad reach of OFAC's Iranian sanctions programs by establishing controls on Iranian trade, investments, and services.... As under the IACR, there is a general prohibition under the ITR of unauthorized transactions, coupled with specific licenses permitting certain kinds of transactions.” Flatow, 305 F.3d at 1255; see also Weinstein v. Islamic Republic of Iran, 299 F.Supp.2d 63, 68 (E.D.N.Y.2004) (“The ITR prohibited, inter alia, the importation of goods and services from Iran, and the exportation, reexportation, and sale or supply of goods, technology or services to Iran.”).

2. Attachment and Execution under the FSIA

“It is a well-established rule of international law that the public property of a foreign sovereign is immune from legal process without the consent of that sovereign.” Loomis v. Rogers, 254 F.2d 941, 943 (D.C.Cir.1958); see also Weinstein v. Islamic Republic of Iran, 274 F.Supp.2d 53, 56 (D.D.C.2003) ([T]he principles of sovereign immunity ‘apply with equal force to attachments and garnishments.’) (quoting Flatow v. Islamic Republic of Iran, 74 F.Supp.2d 18, 21 (D.D.C.1999)). To promote this general principle, the FSIA broadly designates all foreign-owned property as immune, and then articulates limited exceptions to that immunity. See 28 U.S.C. § 1609 ([T]he property in the United States of a foreign state shall be immune from attachment, arrest and execution except as provided in sections 1610 and 1611 of this chapter.”). These exceptions include, inter alia, property (1) located in the United States that is (2) used for commercial activity and (3) controlled by a foreign state or its instrumentalities. Id. at § 1610(a)-(b); see also Bennett v. Islamic Republic of Iran, 604 F.Supp.2d 152, 161 (D.D.C.2009) ([The FSIA] provides that the property of a foreign state is not immune from attachment or execution if the property at issue is used for a commercial activity by the foreign state”) (emphasis in original). Though providing a workable framework in theory, the past decade of litigation under the Act has proved, for victims of state-sponsored terrorism, to be a journey down a never-ending road littered with barriers and often obstructed entirely. Two particular roadblocks merit greater discussion.

The first difficulty plaintiffs holding judgments against Iran often faced was the limited number of Iranian assets remaining in the United States. Attempting to overcome this shortfall, plaintiffs targeted property in which an Iranian entity—often a financial institution owned or controlled by Iran—had an interest. Though expressly sanctioned by § 1610(b), this strategy was undercut by the Supreme Court's decision in First Nat'l City Bank v. Banco Para El Comercio Exterior de Cuba, which involved a U.S. financial institution's attempt to collect money owed to it by the Cuban government through the seizure of funds deposited in the institution by a Cuban bank. 462 U.S. 611, 613, 103 S.Ct. 2591, 77 L.Ed.2d 46 (1983). In its opinion, the Supreme Court observed that “government instrumentalities established as juridical entities distinct and independent from their sovereign should normally be treated as such,” and determined that Congress “clearly expressed its intention that duly created instrumentalities of a foreign state are to be...

To continue reading

Request your trial
23 cases
  • Estate of Heiser v. Islamic Republic of Iran
    • United States
    • U.S. District Court — District of Columbia
    • 31 Agosto 2012
    ...Company LP to turn over $613,587.38 owed to the Telecommunication Infrastructure Company of Iran. Heiser v. Islamic Republic of Iran, 807 F.Supp.2d 9 (D.D.C.2011)( Heiser III ).2 While this clearly represented a victory for the plaintiffs, this Court noted that “the bleak reality is that to......
  • United States v. All Funds On Deposit With R.J. O'Brien & Assocs.
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • 2 Abril 2015
    ...judgment to attach an asset ... provided the asset was a ‘blocked asset ’ ”) (emphasis added); Estate of Heiser v. Islamic Republic of Iran, 807 F.Supp.2d 9, 18 n. 6 (D.D.C.2011) (“The TRIA ... applies only to blocked assets”).Relevantly then, TRIA defines blocked assets as:(A) any asset se......
  • Stansell v. Revolutionary Armed Forces Colombia
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • 16 Octubre 2014
    ...extends to agencies or instrumentalities of terrorist judgment debtors under the FSIA. See, e.g., Estate of Heiser v. Islamic Republic of Iran, 807 F.Supp.2d 9, 23 (D.D.C.2011) (“Congress did not intent [sic] to require service of garnishment writs on agencies or instrumentalities of foreig......
  • Ministry Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc.
    • United States
    • U.S. District Court — Southern District of California
    • 27 Noviembre 2013
    ...from immunity from suit” because Congress intended “foreign states to voluntarily comply with U.S. court judgments”); Heiser, 807 F.Supp.2d at 12–16, 18–19, 25–26 (same). Historically, countries retained jurisdictional and attachment immunity for “ ‘sovereign or public acts ( jure imperii )......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT