Kaplan v. Lebanese Canadian Bank, SAL

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: GEORGE B. DANIELS, United States District Judge
• Citation: Kaplan v. Lebanese Canadian Bank, SAL, 405 F.Supp.3d 525 (S.D. N.Y. 2019)
• Decision Date: 20 September 2019
• Docket Number: 08 Civ. 7253 (GBD)
• Parties: Chaim KAPLAN, Rivka Kaplan, Brian Erdstein, Karene Erdstein, Ma'ayan Erdstein, Chayim Kumer, Nechama Kumer, Laurie Rappepport, Margalit Rappeport, Theodore (Ted) Greenberg, Moreen Greenberg, Jared Sauter, Dvora Chana Kaszemacher, Chaya Kaszemacher Alkareif, Avishai Reuvane, Elisheva Aron, Yair Mor, and Mikimi Steinberg, Plaintiffs, v. LEBANESE CANADIAN BANK, SAL, Defendant.

405 F.Supp.3d 525

Chaim KAPLAN, Rivka Kaplan, Brian Erdstein, Karene Erdstein, Ma'ayan Erdstein, Chayim Kumer, Nechama Kumer, Laurie Rappepport, Margalit Rappeport, Theodore (Ted) Greenberg, Moreen Greenberg, Jared Sauter, Dvora Chana Kaszemacher, Chaya Kaszemacher Alkareif, Avishai Reuvane, Elisheva Aron, Yair Mor, and Mikimi Steinberg, Plaintiffs,

v.LEBANESE CANADIAN BANK, SAL, Defendant.

08 Civ. 7253 (GBD)

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

Signed September 20, 2019

Robert Joseph Tolchin, The Berkman Law Office, LLC, Brooklyn, NY, David Jaroslawicz, Jaroslawicz & Jaros, LLC, New York, NY, for Plaintiffs.

Allison Galena Schnieders, Mark Paul Ladner, Mark David McPherson, Morrison & Foerster LLP, New York, NY, for Defendants.

MEMORANDUM DECISION AND ORDER

GEORGE B. DANIELS, United States District Judge:

Plaintiffs, American citizens who were injured by rocket attacks perpetrated by the terrorist organization Hizbollah in Israel during July and August 2006, bring this action under the Anti-Terrorism Act, 18 U.S.C. § 2333 (the "ATA"), as amended by the Justice Against State Sponsors of Terrorism Act, Pub. L. 114-222, 130 Stat. 852 (2016) ("JASTA"). (Second Am. Compl. ("SAC"), ECF No. 99.) Plaintiffs allege that Defendant Lebanese Canadian Bank, SAL (the "Defendant" or "LCB") facilitated these attacks by providing banking services to Hizbollah through Hizbollah's affiliates. (See id. ¶ 3.) Defendant moves to dismiss Plaintiffs' complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (Notice of Mot. to Dismiss Second Am. Compl., ECF No. 105.) Defendant's motion to dismiss is GRANTED.

I. FACTUAL BACKGROUND

This action arises out of a series of rocket attacks carried out by Hizbollah in Israel between July 12 and August 14, 2006. (SAC ¶ 4.) Plaintiffs are eighteen American citizens who suffered injuries as a result of those attacks, including physical, psychological, and emotional injuries, property damage, and lost income. (Id. ¶¶ 51–61.) Defendant is a now-defunct Lebanese bank¹ that Plaintiffs allege "intentionally and/or recklessly provided [to Hizbollah] extensive banking services" that "caused, enabled and facilitated" the attacks at issue. (Id. ¶¶ 5–6.)

Plaintiffs allege that between at least 2004 through July 2006, Defendant maintained bank accounts (the "LCB Accounts") for Hizbollah under the names of two Hizbollah leaders and three "subordinate entities" created and wholly controlled by Hizbollah (the "Five Customers"). (Id. ¶¶ 21, 23, 37–39.) These leaders include Husayn al-Shami and Wahid Mahmoud Sbeity, and these "subordinate entities" include the Shahid (Martyrs) Foundation ("Shahid"), which allegedly provides "financial and other material support to Hizbollah terrorists wounded in action, and to the families of Hizbollah terrorists killed in action"; Bayt al-Mal, which allegedly functions as Hizbollah's "main financial body"; and the Yousser Company for Finance and Investment ("Yousser"), which, together with Bayt al-Mal, allegedly functions as Hizbollah's "unofficial treasury." (Id. ¶¶ 21–24.) Plaintiffs allege that at "all times," all of the LCB Accounts and funds therein "belonged to" and "were under the control of" Hizbollah, and that all transactions carried out in the LCB Accounts were "carried out by" and "at the direction of" Hizbollah. (Id. ¶¶ 41–44.) Plaintiffs further allege that between 2004 and July 2006, Hizbollah made and received wire transfers totaling millions of dollars through the LCB Accounts. (Id. ¶¶ 45–46.)

According to Plaintiffs, Hizbollah conducted wire transfers through the LCB Accounts "in order to transfer and receive funds necessary for planning, preparing and carrying out Hizbollah's terrorist activity," including the rocket attacks that injured Plaintiffs. (Id. ¶ 64.) Plaintiffs allege that Hizbollah perpetrated the attacks using funds received through the wire transfers, and that these funds were sufficient to carry out the attacks. (Id. ¶¶ 68–69.) Plaintiffs further allege that but for Defendant's provision of wire transfer and other banking services to Hizbollah, Hizbollah's ability to carry out the attacks would have been "severely crippled and limited." (Id. ¶ 66.)

In their complaint, Plaintiffs allege that Defendant knew or should have known that providing such banking services would result in Plaintiffs' injuries. In particular, they allege that Defendant knew that Shahid, Bayt-al-Mal, and Yousser were "integral constituent parts of Hizbollah," that the LCB Accounts and funds therein were owned and controlled by Hizbollah, and that the wire transfers were conducted by and at the direction of Hizbollah. (Id. ¶ 76.) Plaintiffs allege that Defendant had such knowledge because Hizbollah's affiliation with Shahid, Bayt-al-Mal, and Yousser was "notorious public knowledge," as evidenced by various news articles, reports, and Hizbollah's own media sources. (Id. ¶¶ 77–79.) According to Plaintiffs, if Defendant did not have such actual knowledge, then Defendant should have known because it had a duty to perform due diligence on its customers, monitor and report suspicious or illegal banking activities, and not provide banking services to terrorist organizations. (Id. ¶¶ 84–87.)

Finally, Plaintiffs allege that Defendant provided the wire transfer and other banking services to Hizbollah "as a matter of official LCB policy and practice" in order, among other things, "to assist and advance Hizbollah's terrorist activities against Jews in Israel." (Id. ¶ 96.)

II. PROCEDURAL HISTORY

Plaintiffs commenced this action on July 11, 2008. ( Compl., ECF No. 1 -.) On January 22, 2009, Plaintiffs filed an amended complaint asserting claims against Defendant under the ATA, the Alien Tort Statute (the "ATS"), and Israeli law. (First Am. Compl., ECF No. 23.)

Subsequently, on April 17, 2009, Defendant moved to dismiss all claims against it for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (Notice of Mot., ECF No. 34.) This Court granted Defendant's motion to dismiss on March 31, 2010, finding that Defendant's maintenance and use of a New York correspondent bank account to provide the wire transfer services at issue were too attenuated from the rocket attacks to assert personal jurisdiction. Licci v. Am. Exp. Bank Ltd. , 704 F. Supp. 2d 403, 408 (S.D.N.Y. 2010), aff'd in part sub nom. Licci ex rel. Licci v. Lebanese Canadian Bank, SAL , 672 F.3d 155 (2d Cir. 2012), and vacated in part sub nom. Licci ex rel. Licci v. Lebanese Canadian Bank, SAL , 732 F.3d 161 (2d Cir. 2013) (" Licci I "). This Court declined to rule, however, on Defendant's alternative grounds for seeking dismissal under Rule 12(b)(6). On appeal, the Court of Appeals for the Second Circuit vacated the dismissal of Plaintiffs' claims against Defendant and remanded for further proceedings. Licci I , 732 F.3d at 165.

Following remand, this Court issued a second decision on April 14, 2015, again dismissing Plaintiffs' ATA, ATS, and Israeli law claims against Defendant. Licci by Licci v. Lebanese Canadian Bank, SAL , No. 08 CIV. 7253 (GBD), 2015 WL 13649462, at *3 (S.D.N.Y. Apr. 14, 2015) (" Licci II "), aff'd on other grounds , 834 F.3d 201 (2d Cir. 2016) (" Licci III "), and aff'd in part sub nom. Licci v. Lebanese Canadian Bank, SAL , 659 F. App'x 13 (2d Cir. 2016), and order vacated in part sub nom. Licci v. Lebanese Canadian Bank, SAL , No. 08 CIV. 7253 (GBD), 2018 WL 5090972 (S.D.N.Y. Oct. 3, 2018) (" Licci IV "). This Court found that the ATA claims, in particular, were precluded by a prior decision rendered by a district court in the District of Columbia, dismissing similar ATA claims asserted by Plaintiffs in connection with the same rocket attacks at issue here. Id. at *2–3 (citing Kaplan v. Central Bank of Islamic Republic of Iran , 961 F. Supp. 2d 185 (D.D.C. 2013) (" Kaplan I "), aff'd in part, vacated in part, remanded sub nom. Kaplan v. Central Bank of the Islamic Republic of Iran , 896 F.3d 501 (D.C. Cir. 2018) (" Kaplan II ")). The court in that case had found that the rocket attacks were an "act of war" and therefore fell within an exception under the ATA. Kaplan I , 961 F. Supp.2d at 204.

On July 20, 2018, the Court of Appeals for the District of Columbia Circuit vacated the dismissal of Plaintiffs' claims in Kaplan I . Kaplan II , 896 F.3d at 512–14. The D.C. Circuit found that the "act of war" exception "presents a merits issue, not a jurisdictional one," and that the district court had therefore erred in relying on the exception to dismiss Plaintiffs' claims without first establishing personal jurisdiction. Id. at 512. Plaintiffs consequently moved for vacatur of this Court's dismissal in Licci II of Plaintiffs' ATA claims. (Notice of Mot., ECF No. 88.) This Court granted Plaintiffs' motion on October 3, 2018. Licci IV.

Following such vacatur, this Court granted Plaintiffs' request for leave to file a seconded amended complaint, (Memo Endorsement dated Nov. 5, 2018, ECF No. 96 ), which Plaintiffs did on December 5, 2018, (SAC). In their complaint, Plaintiffs assert two claims against Defendant: (1) primary liability for international terrorism under the ATA, § 2333(a), and (2) secondary liability for international terrorism under the ATA, § 2333(d)(2). (Id. ¶¶ 99–116.) Defendant now moves to dismiss Plaintiffs' complaint for failure to state a claim.

III. LEGAL STANDARD

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The plaintiff must demonstrate "more than a sheer possibility that a defendant has acted unlawfully"; stating a facially plausible claim requires ...