Leibovitch v. Islamic Republic of Iran

• Citation: 188 F.Supp.3d 734
• Decision Date: 19 May 2016
• Docket Number: No. 08 C 1939,08 C 1939
• Parties: Shlomo Leibovitch, et al., Plaintiffs, v. Islamic Republic of Iran, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

188 F.Supp.3d 734

Shlomo Leibovitch, et al., Plaintiffs,

v.Islamic Republic of Iran, et al., Defendants.

No. 08 C 1939

United States District Court, N.D. Illinois, Eastern Division.

Signed May 19, 2016

Daniel A. Shmikler, Robert David Cheifetz, Sperling & Slater, P.C., Chicago, IL, David J. Strachman, McIntyre, Tate, Lynch & Holt, Providence, RI, for Plaintiffs.

MEMORANDUM OPINION AND ORDER

Rubén Castillo, United States District Court

In this long-running case, Shlomo Leibovitch and several of his family members ("Plaintiffs") seek to recover for injuries they suffered as a result of an act of terrorism committed in Israel with the support of the Islamic Republic of Iran and the Iranian Ministry of Information ("Defendants"). Presently before the Court are motions to quash filed by non-parties Bank of Tokyo-Mitsubishi UFJ, Ltd. ("Bank of Tokyo") and BNP Paribas ("Paribas") (collectively, "the banks"), as well as Plaintiffs' post-judgment motions to compel discovery from these non-party banks. (R. 133, Bank of Tokyo's Mot. to Quash; R. 139, Bank of Tokyo's Mot. to Quash: R. 149, Paribas' Mot. to Quash; R. 154, Pls.' Mot. to Compel: R. 158, Pls.' Mot. to Compel.) For the reasons stated below, the banks' motions are granted and Plaintiffs' motions are denied.

BACKGROUND

Several opinions have been issued in this case as it wound its way up to the U.S. Court of Appeals for the Seventh Circuit and back down again. See Leibovitch, et al. v. Islamic Republic of Iran, et al. , 697 F.3d 561 (7th Cir.2012) ; Leibovitch v. Syrian Arab Republic , 25 F.Supp.3d 1071 (N.D.Ill.2014) ; Leibovitch, et al. v. Syrian Arab Republic, et al. , No. 08 C 1939, 2011 WL 444762 (N.D.Ill. Feb. 1, 2011). The tragic facts underlying the case are repeated here only briefly.

On June 17, 2003, Leibovitch, an Israeli citizen, was driving with several of his family members along a highway in Jerusalem in an area bordering the West Bank. Leibovitch , 697 F.3d at 562. Their minivan was hit by bullets, tragically killing seven-year-old Noam Leibovitch and seriously injuring three-year-old Shira Leibovitch. Id. It was later learned that the group Palestine Islamic Jihad ("PIJ") had carried out the shooting. Id. Believing that the group had connections to the Iranian government. Plaintiffs filed this suit against Defendants pursuant to the Antiterrorism Act ("ATA"). 18 U.S.C. § 2333, and the state-sponsored terrorism exception contained in the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605A. Id. at 562–63. A default was entered after Defendants were served through diplomatic channels but failed to appear. Id. at 562. Based on the evidence submitted by Plaintiffs, the Court held Defendants vicariously liable for Plaintiffs' injuries after finding that they had "openly provided material support and resources for the PIJ's campaign of extrajudicial killings." Id. Ultimately, default judgment was entered in favor of Plaintiffs totaling nearly $67 million for the physical and emotional injuries they suffered as a result of the attack. (R. 74, Judgment; R. 107, Am. Judgment.)

In an effort to collect on their judgment, Plaintiffs recently served discovery requests and citations to discover assets on Bank of Tokyo and Paribas. (See R. 154, Pls.' Mot. to Compel: R. 158, Pls.' Mot. to Compel.) Bank of Tokyo is a Japanese bank headquartered in Tokyo. (R. 168, Cunningham Deal. ¶¶ 2–4.) It has approximately 700 branches in Japan and 75 branches located in 40 other countries: it has a total of 11 branches and offices in the United States, including a branch in Chicago. Illinois. (Id. ) Its Chicago branch services only a limited number of corporate customers with offices in the Midwestern United States. (R. 142, Cunningham Supply. Deal. 5.) The branch has approximately 70 employees, which represents a small percentage of its 35.000 total employees; the Chicago branch generated approximately .06 percent of the bank's total profits for the fiscal year ending March 2015. (Id. ¶¶ 6–7.) Paribas is a French bank with its headquarters in Paris. (R. 152, Christie Deal. ¶ 3.) It has 6.800 branches worldwide, with three branches and three other offices in the United States, including a branch in Chicago. (R. 153, Zambrana Deal., Ex. R at 23, 34.) The Chicago branch employs 47 individuals, which is less than one-tenth of a percent of the 185,000 employees of Paribas worldwide. (Id. ¶ 4.) The branch offers a variety of services, but its primary business is providing bank line lending services to U.S. clients. (Id. )

The discovery directed at these banks seeks information about Defendants' assets, if any, that the banks hold either here or abroad. Plaintiffs have served identical citations on the banks that purport to compel them to freeze any assets of Defendants that they have, wherever these assets may be located. (R. 138, Viapiano Decl., Ex. A at 6; R. 153, Zambrano Decl., Ex. B.) The citations also require a designated corporate officer of the banks to appear and be examined under oath as to any assets the banks may hold belonging to Defendants. (See R. 138, Viapiano Decl., Ex. A at 5–6.) The citations warn that the "failure to comply ... may result in a judgment being entered against you for the unsatisfied amount of this judgment." or arrest and the imposition of contempt sanctions, including "imprisonment in the county jail." (Id. at 6.)

Plaintiffs have also served the banks with document subpoenas pursuant to Federal Rule of Civil Procedure 45, and deposition subpoenas pursuant to Federal Rule of Civil Procedure 30(b)(6). The document subpoenas seek "[d]ocuments sufficient to identify all Iranian Accounts" maintained by the banks from February 2012 to the present. (Id. Ex. B at 19, 22.) "Iranian Accounts" are defined as "any and all accounts at any and all branches or subsidiaries of [the banks] that belonged to and/or were in the name of, or for the benefit of," Defendants. (Id. at 22.) For all such accounts, Plaintiffs seek an array of information, including "[a]ll account opening documents," "[a]ll account customer information" for each account, current balances, detailed transaction histories, and any documents regarding any account closures. (Id. at 19–20.)

Similarly, the Rule 30(b)(6) subpoena requires the banks to designate an officer or director who can testify regarding the following matters:

The details of all financial accounts maintained by [the banks] located anywhere in the world held in the name of, or for the benefit of, Iran .... the names and locations of the branches at which such accounts are held, the account numbers on such accounts, the current account balances on such accounts, transaction histories for such accounts and any communications with the Office of Foreign Assets Control of the United States Treasury (OFAC), or any other department or agency of the government of the United States concerning such accounts.

(R. 143, Viapiano Suppl. Decl., Ex. A at 7.)

The banks respond that they have duly searched the records at their Chicago branches and have not located any responsive assets, documents, or information. (R. 152, Christie Decl. ¶ 7; R. 168, Cunningham Suppl. Decl. ¶ 6.) They further assert that they have no employee with knowledge of such accounts at their Chicago branches, and that these local branches do not have access to a centralized database of customer and account information that would allow them to obtain documents and information located at the banks' headquarters, at other branches, or with the banks' affiliates and subsidiaries worldwide.¹ (R. 136, Cunningham Decl. ¶¶ 8–11; R. 152, Christie Decl. ¶ 5.) The banks asked Plaintiffs to voluntarily limit the scope of the subpoenas to records and information located at the Chicago branches, but Plaintiffs would not agree to this limitation. (R. 138, Viapiano Decl. ¶ 8.) In Plaintiffs' view, the discovery issued requires the banks to "search and produce documents and information located in any ... branch anywhere in the world." (Id. Ex. C at 25.)

The banks resist being ordered to produce discovery beyond their Chicago branches, as they believe that this Court lacks personal jurisdiction over them and that principles of international comity militate against permitting the expansive, global discovery that Plaintiffs have requested. They argue that determining whether any accounts or documents are held in other bank offices throughout the world would require a burdensome search and, further, that disclosing these records would potentially subject them to civil or criminal liability in their home countries. Therefore, they seek to quash the citations and subpoenas issued by Plaintiffs. (R. 133, Bank of Tokyo's Mot. to Quash; R. 139, Bank of Tokyo's Mot. to Quash; R. 149, Paribas' Mot. to Quash; R. 151, Paribas' Mem.; R. 152, Christie Decl.; R. 153, Zambrano Decl.; R. 168, Cunningham Decl.; R. 169, Wolfe Decl.; R. 172, Banks' Reply; R. 173, Inoshita Decl.; R. 197, Banks' Suppl. to Mot.)

Plaintiffs object to the banks' motions to quash and separately move to compel responses to their discovery requests. (R. 154, Pls.' Mot. to Compel; R. 155, Pls.' Mem.; R. 158, Pls.' Mot. to Compel; R. 159, Pls.' Mem.; R. 160, Tolchin Decl.; R. 164, Pls.' Opp'n; R. 165, Pls.' Opp'n; R. 170, Pls.' Reply.) They acknowledge that they are seeking "discovery concerning Iranian bank accounts maintained by the Bank[s] in [their] overseas branches." (R. 165, Pls.' Opp'n at 1). In their view, personal jurisdiction exists over the banks and it is otherwise proper for the Court to order such relief. (R. 155, Pls.' Mem.; R. 159, Pls.' Mem.) After extensive briefing, these matters are now ripe for decision.²

ANALYSIS

Before turning to the parties' discovery dispute, some legal background on the FSIA and applicable post-judgment discovery procedures is needed. "The default rule of United States law is that foreign states are immune from suit and attachment of assets in United States courts, but [the FSIA] provides...