Licci v. Lebanese Canadian Bank, SAL, Docket No. 10–1306–cv.

• Court: U.S. Court of Appeals — Second Circuit
• Writing for the Court: SACK
• Citation: 673 F.3d 50
• Parties: Yaakov LICCI, a minor, by his father and natural guardian, Elihav LICCI, and by his mother and natural guardian, Yehudit Licci, et al., Plaintiffs–Appellants, v. LEBANESE CANADIAN BANK, SAL; American Express Bank Ltd., Defendants–Appellees. *
• Docket Number: Docket No. 10–1306–cv.
• Decision Date: 05 March 2012

673 F.3d 50

Yaakov LICCI, a minor, by his father and natural guardian, Elihav LICCI, and by his mother and natural guardian, Yehudit Licci, et al., Plaintiffs–Appellants,
v.
LEBANESE CANADIAN BANK, SAL; American Express Bank Ltd., Defendants–Appellees. *

Docket No. 10–1306–cv.

United States Court of Appeals, Second Circuit.

Argued: Feb. 25, 2011.Decided: March 5, 2012.

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Robert J. Tolchin, Jaroslawicz & Jaros, New York, NY, for Plaintiffs–Appellants.

Jonathan D. Siegfried (Lawrence S. Hirsh, on the brief), Dewey & LeBoeuf LLP, New York, NY, for Defendant–Appellee Lebanese Canadian Bank, SAL.

Mark P. Ladner (Mark David McPherson, Michael Gerard, on the brief), Morrison & Foerster LLP, New York, NY, for Defendant–Appellee American Express Bank Ltd.

Before: KEARSE, SACK, and KATZMANN, Circuit Judges.

SACK, Circuit Judge:

This appeal presents the question whether a foreign bank's maintenance and use of a correspondent banking account in New York to conduct wire transfers on behalf of a foreign client renders it amenable to personal jurisdiction in New York under the state's long-arm statute to defend against claims asserted by victims of terrorist attacks committed abroad. The plaintiffs are several dozen American, Canadian, and Israeli citizens, all of whom reside in Israel, who were injured, or whose family members were killed or injured, in rocket attacks allegedly committed by Hizballah, designated as an Islamic

[673 F.3d 55]

terrorist organization,¹ in July and August 2006. The plaintiffs have brought suit against Lebanese Canadian Bank, SAL (“LCB”), ² a Lebanese bank headquartered in Beirut, alleging that LCB assisted Hizballah by facilitating the international financial transactions of a Hizballah-affiliated entity. The plaintiffs allege that LCB carried out dozens of dollar denominated international wire transfers totaling several million dollars over the course of several years on behalf of the Hizballah affiliate, with the assistance of another defendant, American Express Bank, where LCB maintained and used a correspondent banking account. According to the plaintiffs, in carrying out these transactions, LCB acted with the knowledge that they were for the purpose of facilitating Hizballah's ability to carry out acts of terrorism, such as the rocket attacks at issue here. The plaintiffs assert claims against LCB under the Anti–Terrorism Act, 18 U.S.C. § 2333(a); the Alien Tort Statute, 28 U.S.C. § 1350; and Israeli tort law.

The district court (George B. Daniels, Judge) granted LCB's motion to dismiss for lack of personal jurisdiction on the grounds that LCB's maintenance of a correspondent banking account in New York and use of that account to wire funds on behalf of the Hizballah affiliate were insufficient to establish specific personal jurisdiction over LCB under the New York long-arm statute, N.Y. C.P.L.R. § 302(a)(1). The court concluded both that “[t]he execution of wire transfers ... alone is [not] sufficient to confer jurisdiction over a foreign bank,” Licci v. Am. Express Bank Ltd., 704 F.Supp.2d 403, 407 (S.D.N.Y.2010), and that there was no “articulable nexus or substantial relationship ... between LCB's general use of its correspondent account for wire transfers through New York and the specific terrorist activities by Hizbollah underlying plaintiffs' claims,” id. at 408. The plaintiffs appeal.

The question of whether, and if so to what extent, personal jurisdiction may be established under N.Y. C.P.L.R. § 302(a)(1) over foreign banks based on their use of correspondent banking accounts in New York remains unsettled. We conclude that New York law is insufficiently developed in this area to enable us to predict with confidence how the New York Court of Appeals would resolve these issues of New York State law presented on appeal. We therefore certify to the Court of Appeals two questions concerning the application of the New York long-arm statute.

BACKGROUND

The facts set forth below are drawn from the plaintiffs' first amended complaint,

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see Am. Compl., Licci v. Am. Express Bank Ltd., 704 F.Supp.2d 403 (S.D.N.Y.2010), ECF No. 23 (“Compl.”), and from the district court's opinion dismissing the claims against LCB for lack of personal jurisdiction, see Licci, 704 F.Supp.2d at 404–06. All well-pleaded facts are accepted as true at this stage of the litigation. See Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir.2010). We recite only the facts that we think necessary for an understanding of our resolution of this appeal.

Allegations of the Amended Complaint

According to the allegations contained in the Amended Complaint, between July 12, 2006, and August 14, 2006, Hizballah, an Islamic terrorist organization, fired thousands of rockets into northern Israel. The plaintiffs or their family members were injured or killed by these attacks. See Compl. ¶¶ 58–112.

The defendant, LCB, is a Lebanese bank with no branches, offices, or employees in the United States. LCB does, however, maintain a correspondent banking account at AmEx in New York.³ The plaintiffs allege that LCB used this account to conduct dozens of international wire transfers on behalf of the Shahid (Martyrs) Foundation (“Shahid”), an entity that maintained bank accounts with LCB and which the plaintiffs allege to be an “integral part” of Hizballah and “part of [its] financial arm.” Id. ¶ 46; see also id. ¶ 50 (alleging that the Shahid-titled bank accounts “belonged to Hizbollah and were under the control of Hizbollah”). These wire transfers, which totaled several million dollars, “substantially increased and facilitated Hizbollah's ability to plan, to prepare for[,] and to carry out” the rocket attacks that injured the plaintiffs. Id. ¶ 116.

The plaintiffs contend that LCB's role in conducting those wire transfers on Shahid's behalf was actionable. They allege that LCB had “actual knowledge” that Hizballah was a violent terrorist organization, as reflected on official U.S. government lists,⁴ and that Shahid was “part of Hizbollah's financial arm.” Id. ¶¶ 130, 135. Moreover, the plaintiffs allege that the bank, as a matter of “official LCB policy,” “continuously supports and supported Hizbollah and its anti-Israel program, goals

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and activities.” Id. ¶ 126. In particular, the plaintiffs allege that LCB carried out the wire transfers “in order to assist and advance Hizbollah's goal of using terrorism to destroy the State of Israel.” Id. ¶ 129.

Procedural History

The plaintiffs began this lawsuit in New York State Supreme Court, New York County, on July 11, 2008. On August 15, 2008, AmEx removed the matter to the United States District Court for the Southern District of New York.

On January 22, 2009, the plaintiffs filed an amended complaint. It contains five claims against LCB: (1) primary liability for international terrorism under the Anti–Terrorism Act, 18 U.S.C. § 2333(a) (“the Anti–Terrorism Act”); (2) aiding-and-abetting liability for international terrorism under the Anti–Terrorism Act; (3) aiding-and-abetting liability for genocide, war crimes, and crimes against humanity in violation of international law, as made actionable by the Alien Tort Statute, 28 U.S.C. § 1350 (the “ATS”); (4) negligence, in violation of Israeli Civil Wrongs Ordinance § 35; and (5) breach of statutory duty, in violation of Israeli Civil Wrongs Ordinance § 63. ⁵ The Anti–Terrorism Act claims are brought by the American plaintiffs alone; the ATS claims are brought by various Canadian and Israeli plaintiffs; and the Israeli-law claims are brought by all but four plaintiffs.

On April 17, 2009, LCB moved to dismiss all claims against it for lack of personal jurisdiction under Rule 12(b)(2) and for failure to state a claim under Rule 12(b)(6). On July 6, 2009, the plaintiffs filed an opposition to LCB's motion and submitted, among other material, a declaration by a former Israeli counter-terrorism official attesting to the fact that Shahid is a financial front for Hizballah. LCB filed a reply on September 3, 2009.

The District Court's Jurisdictional Ruling

On March 31, 2010, the district court granted LCB's motion to dismiss pursuant to Rule 12(b)(2), concluding that the plaintiffs had failed to make a prima facie showing of personal jurisdiction over the defendants under N.Y. C.P.L.R. § 302(a)(1). See Licci, 704 F.Supp.2d at 406–08. According to the court, “ ‘[t]o establish personal jurisdiction under section 302(a)(1), two requirements must be met: (1) The defendant must have transacted business within the state; and (2) the claim asserted must arise from that business activity.’ ” Id. at 406 (quoting Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 103 (2d Cir.2006)). The court characterized the plaintiffs' theory of jurisdiction as depending solely upon LCB's “alleged use of defendant Amex Bank as its correspondent bank to carry out wire transfers of funds to and from the Shahid-entitled bank accounts.” Id. at 406. Rejecting that theory, the court appeared to conclude that neither of the two requirements for jurisdiction

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under N.Y. C.P.L.R. § 302(a)(1) had been satisfied.

With respect to the first, “transacted business,” prong, the district court relied upon the general principle that “[t]he mere maintenance of [a] correspondent bank account with a financial institution in New York is not, standing alone, a sufficient basis to subject a foreign defendant to personal jurisdiction under § 302(a)(1).” Id. at 407. Although the court acknowledged that in some circumstances, a “foreign bank's improper use of a New York correspondent account” may support long-arm jurisdiction, id. (citing cases), the court concluded that “[t]he execution of wire transfers is not a ‘use’ of a correspondent account which alone is sufficient to confer jurisdiction over a foreign bank,” id., and therefore “no meaningful distinction may be drawn between a foreign bank's maintenance of a...