Flatow v. Islamic Republic of Iran, 01-7101.

• Decision Date: 08 October 2002
• Docket Number: No. 01-7101.,No. 01-7149.,01-7101.,01-7149.
• Parties: Stephen M. FLATOW, Individually and as Administrator of the Estate of Alisa Michelle Flatow, deceased, Appellant, v. ISLAMIC REPUBLIC OF IRAN, The Ministry of Foreign Affairs, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1249

305 F.3d 1249

Stephen M. FLATOW, Individually and as Administrator of the Estate of Alisa Michelle Flatow, deceased, Appellant, v. ISLAMIC REPUBLIC OF IRAN, The Ministry of Foreign Affairs, et al., Appellees.

No. 01-7101.

No. 01-7149.

United States Court of Appeals, District of Columbia Circuit.

Argued September 6, 2002.

Decided October 8, 2002.

Appeals from the United States District Court for the District of Columbia (No. 97cv00396).

Steven R. Perles argued the cause for appellant. With him on the brief was Thomas Fortune Fay.

H. Thomas Byron III, Attorney, U.S. Department of Justice, argued the cause for appellee United States. With him on the brief were Roscoe C. Howard, Jr., U.S. Attorney, and Douglas Letter, Litigation Counsel, U.S. Department of Justice.

Before: EDWARDS, HENDERSON, and ROGERS, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge:

This is an appeal from an order denying a motion to compel payment of post-judgment interest by the United States Treasury Department, and narrowing the scope of a third-party subpoena under Federal Rule of Civil Procedure 45. See Flatow v. Islamic Republic of Iran, 196 F.R.D. 203 (D.D.C.2000). We dismiss the appeal of the claim for post-judgment interest for lack of jurisdiction, and vacate the district court's opinion on that issue, because the district court lacked jurisdiction to entertain a claim against a nonparty. We affirm the district court's interpretation of "regulated" Iranian property under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701-02, and the order limiting the subpoena and the corresponding protective order.

I.

Stephen M. Flatow obtained a default judgment for more than $225 million in compensatory and punitive damages awards in a tort action that he filed against the government of Iran and several of its officials pursuant to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605(a)(7). See Flatow v. Islamic Republic of Iran, 999 F.Supp. 1, 5 (D.D.C. 1998). Flatow's attempts to collect the judgment were unsuccessful.¹ Subsequently, on October 28, 2000, the Victims of Trafficking and Violence Protection Act of 2000, Pub.L. No. 106-386, 114 Stat. 1464 (2000) ("Victims Protection Act") became law, affording certain victims of terrorists' acts an opportunity to recover funds from the United States to satisfy their outstanding judgments.² One month later, on November 28, 2000, Flatow applied for such funds, electing 100% recovery of the amount of compensatory damages plus post-judgment interest. See Victims Protection Act, § 2002(a)(1)(B). His application was approved, and on January 4, 2001, the Treasury Department transferred to Flatow more than $26 million, representing the compensatory damages award and post-judgment interest on that portion of the judgment. As a condition of receiving funds from the United States, Flatow was required under § 2002(a)(2)(D) of the Victims Protection Act to relinquish "all rights to execute against or attach property that is ... subject to section 1610(f)(1)(A) of title 28, United States Code."³

Both the scope of Flatow's election of payment and the scope of his relinquishment of the right to attach Iranian assets are at issue. Flatow contends that the district court erred in interpreting the Victims Protection Act first, by denying his motion to compel payment of post-judgment interest on the punitive damages award, which we address in Part II, and second, by narrowing his subpoena because he would be unable to attach Iranian property that is regulated by the United States, which we address in Part III.

II.

Flatow contends that the district court ignored the plain language of § 2002(a)(1)(B) of the Victims Protection Act in denying his motion to compel the Treasury Department to pay post-judgment interest on his punitive damages award. We do not reach the merits of this contention for lack of jurisdiction.

The United States filed a Statement of Interest in the district court on July 23, 1998, in light of Flatow's writs of attachment on three parcels of real estate in the District of Columbia that were diplomatic properties of Iran and that had been held in the custody of the State Department since 1980. The Statement explained that it was submitted solely to protect the United States' interests and to advise the court of its legal obligations with respect to the writs under United States law and international agreements. For example, the Statement argued that the rental of diplomatic residences did not make them commercial properties, and that § 1610(b) is inapplicable because Flatow is seeking attachment of "property in the United States of a foreign state," which is defined in § 1610(a). The Statement sought vacation of the attachments and quashing of the accompanying writs.⁴ The Statement further stated that the United States was not appearing on behalf of Iran and "expressly condemns the acts that brought about the judgment in this case."

In response, Flatow filed a motion to compel payment by the Treasury Department of post-judgment interest on the punitive damages portion of his judgment against Iran. The United States, in turn, argued that Flatow could not convert litigation regarding his Rule 45 subpoena into a proceeding involving an unrelated claim for monetary relief under § 2002(2) of the Victims Protection Act against a non-party, and alternatively, that the United States had not waived its sovereign immunity to suits of this sort in the district court.

The district court did not address the United States' objection to its jurisdiction, ruling instead that Flatow had waived his right to recover interest on his punitive damages award. Flatow v. Islamic Republic of Iran, 201 F.R.D. 5, 11 (D.D.C. 2001). This was error because the court lacked jurisdiction to hear or decide the merits of Flatow's motion to compel a nonparty.

"The principle that courts lacking jurisdiction over litigants cannot adjudicate their rights is elementary...." In re Sealed Case, 141 F.3d 337, 341 (D.C.Cir. 1998). The Federal Rules of Civil Procedure provide that "[t]here shall be one form of action to be known as `civil action'" and such an action shall be commenced by filing a complaint with the court, with related service, answer, and motions obligations thereafter. See Fed. R.Civ.P. 2, 3, 4, 7(a); see also 1 MOORE'S FEDERAL PRACTICE §§ 3.02[2], 3-7 (3d ed.2000). Under Federal Rule of Civil Procedure 10(a), the names of all parties must appear in the complaint filed in the district court. As in Peralta v. U.S. Attorney's Office, 136 F.3d 169 (D.C.Cir.1998), "the district court lost track of the identity of the `defendant' in this litigation." Id. at 171.

Flatow never named the United States or any agency or officer of the federal government as a defendant in his tort action against Iran under the FSIA. He does not claim to have served the United States or the Treasury Department with a summons, much less to have made a demand on the Treasury Department for post-judgment interest on his punitive damages award prior to filing his motion to compel payment. Nor did Flatow amend his complaint to add the United States as a party, and the district court docket does not indicate that the United States was added as a party through joinder or intervention.

Furthermore, even if the filing of the Statement were viewed as an appearance by the United States, see 28 U.S.C. § 517,⁵ it clearly was a limited appearance, focusing on the attachments and not the merits of the underlying tort action. In addition, the United States presented a jurisdictional objection to Flatow's motion to compel. See Fed.R.Civ.P. 12(b); see also Chase v. Pan-Pacific Broad. Inc., 750 F.2d 131 (D.C.Cir.1984). Cf. Land v. Dollar, 188 F.2d 629, 632 (D.C.Cir.1951). Neither could the filing of the Statement of Interest suffice to make the United States a de facto intervenor, assuming the validity of that concept, for the United States was not present throughout every stage of the proceedings, its interests were not synonymous with those of the named Iranian defendants, and it did not behave as a party in the district court. See Peralta, 136 F.3d at 174. Under the circumstances, the United States took no action that subjected it to the general jurisdiction of the district court. See Dry Clime Lamp Corp. v. Edwards, 389 F.2d 590, 596-97 (5th Cir.1968); McQuillen v. Nat'l Cash Register Co., 112 F.2d 877, 881-82 (4th Cir.1940); Salmon Falls Mfg. Co. v. Midland Tire & Rubber Co., 285 F. 214, 217-18 (6th Cir.1922); Grable v. Killits, 282 F. 185, 194 (6th Cir.1922).

Consequently, the Rule 45 subpoena modification proceeding could not provide a substitute for a properly initiated civil action seeking particular relief, as authorized by statute. The district court, therefore, was without jurisdiction to hear or decide the question raised by Flatow's motion, and the district court's opinion on the merits of his claim should be vacated.

III.

On June 5, 1998, Flatow served a third-party subpoena on the Treasury Department, pursuant to Federal Rule of Civil Procedure 45, to produce "[a]ll documents of any type or description pertaining to any assets which any of the named defendants... have or ever had or ... asserted or alleged any interest, claim, ownership right or security interest" in as well as assets in the custody or control of the defendants, or that constituted "`blocked assets' of the ... defendants." Although the Department objected that the subpoena was overly broad and unduly burdensome, the district court largely rejected that challenge and ordered the Department to comply with the subpoena. See Flatow, 196 F.R.D. 203. In early 2001, however, the Department moved for modification of the subpoena based on Flatow's relinquishment of certain attachment rights under § 2002(a)(2)(D) of the Victims Protection Act, and also requested that certain offices...