Estate of Ungar v. Palestinian Authority

• Decision Date: 11 October 2005
• Docket Number: No. 18 MS 0302(CM).,18 MS 0302(CM).
• Citation: 396 F.Supp.2d 376
• Parties: ESTATE OF Yaron UNGAR, et al., Plaintiffs, v. The PALESTINIAN AUTHORITY, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

Page 376

396 F.Supp.2d 376

ESTATE OF Yaron UNGAR, et al., Plaintiffs, v. The PALESTINIAN AUTHORITY, et al., Defendants.

No. 18 MS 0302(CM).

United States District Court, S.D. New York.

October 11, 2005.

David J. Strachman, McIntyre, Tate, Lynch & Holt, Providence, RI, Robert J. Tolchin, New York, NY, for Plaintiffs.

Ramsey Clark, Ramsey Clark & Lawrence W. Schilling, New York, NY, Maher H. Hanania, Hanania & Khader, John E. Coffey, Aaron S. Book, Reed Smith LLP, Falls Church, VA, Stavroula Elias Lambrakopoulos, Stephen Gregory Topetzes, Kirkpatrick & Lockhart, LLP, Washington, DC, for Defendants.

DECISION AND ORDER GRANTING MOTION OF NON-PARTIES KHALED BICHARA & ORASCOM TELECOM HOLDINGS S.A.E. TO QUASH SUBPOENAS DATED JUNE 9, 2005

MCMAHON, District Judge.

Introduction

Mr. Khaled Bichara, an Egyptian citizen and domiciliary, traveled from Egypt to New York in June 2005 for sentencing in an unrelated matter. While present before the Southern District, he was served with subpoenas pursuant to Fed.R.Civ.P. 45 for himself and for Orascom Telecom, an Egyptian telecommunications company of which he was a board member, to testify in the above matter. Mr. Bichara and Orascom Telecom moved to quash the subpoenas on the grounds of lack of sufficiency of service of process, lack of personal and subject matter jurisdiction, and failure to comply with the "100-mile rule" of Fed.R.Civ.P. 45. They further objected to the scope of the subpoenas and requests for document production.

Because Mr. Bichara was immune from service of process while in New York, the subpoenas for Mr. Bichara and for Orascom Telecom (as served on him) are quashed.

Facts

On June 9, 1996, Yaron Ungar, a U.S. citizen, and his wife Efrat were killed in a machine-gun attack while traveling in Israel. Memorandum of Law in Opposition to Motions to Quash at 2 (hereinafter, Opp.). In March 2000, Mr. Ungar's estate filed suit against, among others, the Palestinian Authority ("PA") and the Palestine Liberation Organization ("PLO") in federal district court in Rhode Island. Id. The action sought damages under the Antiterrorism Act, 18 U.S.C. § 2333(a) (2000), which creates a cause of action for an American national, or his estate, killed or injured by reason of an act of international terrorism. Id. After extensive procedural maneuvering, default judgment was entered for the plaintiffs and damages awarded in the amount of $116,409,123.00 plus fees; the judgment was upheld by the First Circuit Court of Appeals. See Estates of Ungar & Ungar ex.rel. Strachman v. Palestinian Authority, 325 F.Supp.2d 15 (D.R.I.2004), aff'd sub nom. Ungar v. Palestine Liberation Organization., 402 F.3d 274 (1st Cir.2005) (rehearing denied May 20, 2005). In an effort to collect this amount, the plaintiffs registered their judgment in the Southern District of New York pursuant to 28 U.S.C. § 1963 in May 2005. Opp. at 3. The plaintiffs have since pursued domestic assets controlled by the PLO and PA. Id.

Orascom Telecom Holding S.A.E. ("Orascom Telecom") is an Egyptian corporation doing business directly or through subsidiaries across North Africa and the Middle East. Opp. at 3. It provides mobile telecommunications services, satellite communications, and Internet access services to individuals and corporate customers. Id. A controlling majority of Orascom Telecom is owned by Naguib Sawiris and his family; a large minority is publicly traded. Id. at 4. In 2001-2002, a sizable block of shares in several Orascom Telecom subsidiaries was acquired by the Palestinian Authority's Investment Fund. Id. at 6. In early 2005, Orascom Telecom reacquired these shares in exchange for an estimated $340 million in cash and debt. Id. This debt has been identified by the Ungar estate as a potential source of Palestinian assets to satisfy its judgment. Id.

Orascom Telecom is one of the Orascom family of companies, each apparently controlled by the Sawiris family, which also includes Orascom Construction Industries, Orascom Hotels and Development, and Orascom Technology Solutions. Standard and Poor's Initial Report on Valuation and Transparency as of January 1, 2003 (Feb. 25, 2003) at 178 (Respondent's Exhibit C).

The extent of Orascom Telecom's presence and operations in the United States is currently in dispute. Its management denies owning any assets or transacting any significant business within the United States. Declaration of Amr Esmat Abaza (Petitioner's Exhibit 8).¹ The Ungar estate, however, alleges extensive contacts between Orascom Telecom and various American entities, including an American Depository Receipt placement arrangement with the Bank of New York and "extensive" dealings with the United States government. Opp. at 22.

Khaled Bichara (also called Khaled Bishara, or Khaled G. Bishara) is a citizen and domiciliary of Egypt. Memorandum in Aid of Sentencing, U.S. v. Bishara, at 2 (Respondent's Exhibit O) (hereinafter, "Sentencing"). He is the founder of LINKdotNET, previously known as "Link," an Egyptian Internet service provider and web hosting facility. Id. at 3-4. In mid-1999, Orascom Telecom acquired a controlling interest in LINKdotNET, although Mr. Bichara continued to operate as its chief executive. Id. at 3. At present, he is also a member of the board of directors of Orascom Telecom and, apparently, its "Chief Internet Strategist." Opp.at 11.

In 2001, LINKdotNET entered into a series of contracts for the acquisition of telecommunications equipment from Saudi Egyptian Logistics and Electronics Company, known as SALEC; as part of these transactions, Mr. Bichara and SALEC applied to the United States Agency for International Development's (USAID) Commodity Import Program, which underwrites loans for the sale of American-made goods to foreign companies. Sentencing at 9. The proceeds of this loan were used to acquire new equipment, but also to repay debt owed by LINKdotNET to SALEC from prior dealings; this use of funds was not detailed in Mr. Bichara's filings with USAID.² Id. at 8. This misrepresentation contravened 18. U.S.C. § 1001, which prohibits making false statements in applications to USAID. Id. at 1. This misrepresentation was detected, and LINKdotNET was sanctioned and fined by USAID and the Egyptian Ministry of Cooperation. Id. at 12.

Mr. Bichara was arrested on July 10, 2004, while traveling in the United States to attend a business conference in Atlanta, Georgia. Transcript of Oral Argument, Ungar v. Palestinian Authority (Sept. 13, 2005) at 38. On March 8, 2005, before Magistrate Judge Frank Maas in the Southern District of New York, he pled guilty to a one count criminal information based on the misstatements made in the USAID filings. Transcript of Hearing, U.S. v. Bishara [sic] (March 8, 2005) at 16 (Petitioner's Exhibit 7A). The terms of his bail, originally imposed the previous July, were modified to permit his return to Egypt until his sentencing hearing. Id. at 17.

On June 14, 2005, Mr. Bichara returned to the United States for sentencing. Declaration of Marko C. Maglich at ¶ 1 (Petitioner's Exhibit 7) (hereinafter,"Declaration"). Upon his arrival, he was "paroled" into the country by United States Customs and Border Protection officials — that is, he was admitted to the country without a determination of his immigration status solely for the purpose of attending the sentencing hearing. Id. at ¶ 3. He was accompanied by United States Customs and Border Protection or Department of Justice personnel at all times. At the hearing, he was sentenced to pay a fine of $250.00 and an assessment of $100.00. Id. at ¶ 9.

While in the courtroom and just prior to being sentenced, Mr. Bichara was served with the following papers in the matter of Ungar v. Palestinian Authority: (1) a subpoena duces tecum for himself as a non-party deponent; (2) a subpoena duces tecum for Orascom Telecom, served on Mr. Bichara in his capacity as a director and/or officer of that company; and (3) a number of state court papers including a "Restraining Notice Pursuant to CPLR § 5222" and a "Verified Petition Pursuant to CPLR §§ 5225 and 5227." Declaration at ¶ 8. This Court does not consider the validity of the state court papers or service thereof.

Mr. Bichara and Orascom Telecom timely moved to quash the above two subpoenas, based on lack of sufficiency of service of process, lack of personal and subject matter jurisdiction, and failure to comply with the "100-mile rule" of Fed.R.Civ.P. 45. They further objected to the scope of the subpoenas and requests for document production. The motions of Mr. Bichara and Orascom Telecom have since been consolidated.

Discussion

Service on Mr. Bichara

Federal Rule of Civil Procedure 45 grants federal courts the power to issue subpoenas to non-parties to compel testimony or the production of documentary evidence in an ongoing case. This power, however, is not absolute; "the subpoena power of a court cannot be more extensive than its jurisdiction." U.S. Catholic Conf. v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 76, 108 S.Ct. 2268, 2270, 101 L.Ed.2d 69 (1988). The Due Process Clause of the Fourteenth Amendment permits a state to exercise personal jurisdiction over a non-resident defendant with whom it has "certain minimum contacts ... such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Calder v. Jones, 465 U.S. 783, 788, 104 S.Ct. 1482, 1486, 79 L.Ed.2d 804 (1984) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940) and Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)). Alternatively, personal jurisdiction may be acquired by valid personal service of process on an individual physically present within a state, even if that individual lacks sufficient minimum contacts with the state to be subject to long-arm jurisdiction upon her departure. See Burnham v. Superior Ct. of California, 495 U.S. 604, 110...