Licci v. Lebanese Canadian Bank

Decision Date18 October 2013
Docket NumberNo. 10–1306–cv.,10–1306–cv.
PartiesYaakov 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.
CourtU.S. Court of Appeals — Second Circuit

OPINION TEXT STARTS HERE

Robert J. Tolchin, The Berkman Law Office, LLC, Brooklyn, NY, for PlaintiffsAppellants.

Jonathan D. Siegfried, DLA Piper LLP (Lawrence S. Hirsh, Dewey & LeBoeuf LLP, of counsel), New York, NY, for DefendantAppellee, Lebanese Canadian Bank, SAL.

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

SACK, Circuit Judge:

When this case first came to us on appeal, we certified to the New York Court of Appeals two questions concerning the scope of New York's long-arm statute, as set forth in N.Y. C.P.L.R. 302(a)(1), in our effort to determine whether the district court had personal jurisdiction over defendantLebanese Canadian Bank, SAL (LCB). The Court of Appeals accepted our certified questions, and, in response, explained that a foreign bank's use of a New York correspondent account to execute dozens of wire transfers is sufficiently purposeful conduct to constitute a “transaction of business” within the meaning of that section. Licci v. Lebanese Canadian Bank, SAL, 20 N.Y.3d 327, 339, 984 N.E.2d 893, 900, 960 N.Y.S.2d 695, 702 (2012) ( “Licci III ”). The Court of Appeals also concluded that the allegations contained in the complaint, taken as true for these purposes, establish the requisite “nexus” or “relationship” between the foreign bank's New York business activity and the plaintiffs' claims to support the district court's exercise of personal jurisdiction under the long-arm statute. Id. at 340, 984 N.E.2d at 901, 960 N.Y.S.2d at 703.

Now that the New York Court of Appeals has answered the state-law portion of the jurisdictional inquiry, we must ensure that subjecting the foreign bank to personal jurisdiction in New York comports with due process protections provided by the United States Constitution. We conclude that it does. We therefore vacate that part of the district court's judgment dismissing the complaint against defendant LCB for lack of personal jurisdiction and remand for further proceedings.

BACKGROUND

Because our previous opinion extensively recites the facts and procedural history of this case, see Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 55–59 (2d Cir.2012) ( Licci II ), we reiterate here only those facts we think necessary to understand our disposition of this appeal following the New York Court of Appeals' answers to our certified questions.

Plaintiffs are American, Canadian, and Israeli citizens who were injured, or whose family members were injured or killed, in rocket attacks allegedly carried out by Hizballah 1 in July and August 2006 in Israel. Id. at 54–55. Defendant LCB is a Lebanese bank with no operations, branches, or employees in the United States.2Id. at 56. To effectuate U.S.-dollar-denominated transactions, LCB maintains a correspondent bank account 3 with defendant American Express Bank Ltd. (AmEx) in New York. Id. The plaintiffs allege that LCB used this correspondent account to wire millions of dollars on behalf of Hizballah, knowing that such wire transfers would enable Hizballah “to plan, to prepare for and to carry out terrorist attacks,” including the rocket attacks in which the plaintiffs or their family members were injured. Am. Compl. ¶ 131. Specifically, the plaintiffs allege that LCB executed wire transfers using its correspondent account in New York, for an account held by the Shahid (Martyrs) Foundation (“Shahid”), which is a “financial arm” of Hizballah. Id. ¶¶ 45–53. Shahid was the account holder in name only. The plaintiffs allege that funds held in Shahid's LCB account “belonged to Hizbollah and were under the control of Hizbollah,” id. ¶ 50, and that LCB carried out wire transfers for the Shahid account “in order to assist and advance Hizbollah's goal of using terrorism to destroy the State of Israel,” id. ¶ 129.

Proceedings in the District Court

The plaintiffs brought five claims against LCB: (1) commission of international terrorism in violation of the Anti–Terrorism Act, 18 U.S.C. § 2333; (2) aiding and abetting international terrorism in violation of the Anti–Terrorism Act; (3) aiding and abetting genocide, war crimes, and crimes against humanity in violation of international law, under 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 § 63.4 LCB moved to dismiss all five claims for lack of personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure, and for failure to state a claim under Rule 12(b)(6).

In a memorandum decision and order dated March 31, 2010, the district court granted LCB's Rule 12(b)(2) motion to dismiss for want of personal jurisdiction. Licci v. Am. Express Bank Ltd., 704 F.Supp.2d 403 (S.D.N.Y.2010) (“Licci I ”). The district court correctly noted that a defendant may be subject to personal jurisdiction in New York under N.Y. C.P.L.R. 302(a)(1) if (1) the defendant ‘transacted business within the state; and (2) the claim asserted ... arise[s] from that business activity,’ id. at 406 (quoting Solé Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 103 (2d Cir.2006)), but decided that the allegations in the amended complaint were insufficient to satisfy either such prong, id. at 406–08.

With respect to section 302(a)(1)'s transaction of business requirement, the district court concluded that LCB's “execution of wire transfers is not a ‘use’ of a correspondent account which alone is sufficient to confer jurisdiction over a foreign bank” because one of the primary functions of a correspondent account is to facilitate cross-border wire transfers. Id. at 407. It could perceive “no meaningful distinction” between “use” of a correspondent account and the “maintenance” of such an account, which some decisions had found to be insufficient, standing alone, to establish personal jurisdiction. Id. at 407–08.

With respect to section 302(a)(1)'s requirement that a plaintiff's claim “arise from” New York business activity, the district court apparently interpreted New York's long-arm statute to require that the defendant's in-state transaction of business proximately caused the plaintiff's injury. Id. at 408. It found no such proximate causation because [t]he injuries and death suffered by plaintiffs and their family members were caused by the rockets launched by Hizbollah, not by the banking services provided by LCB through its correspondent account or wire transfers with Amex Bank via New York.” Id.

Although the Rule 12(b)(2) dismissal rested entirely on the plaintiffs' failure to make a prima facie showing of long-arm jurisdiction under New York law, the district court also offered its view—without further explication—that [t]he exercise of personal jurisdiction over LCB on the basis alleged by plaintiffs would not comport with constitutional principles of due process.” Id. The court did not reach LCB's alternative argument that the complaint should be dismissed for failure adequately to plead a cause of action under Rule 12(b)(6).

Proceedings in This Court

In our initial consideration of the plaintiffs' appeal, we found the scope and application of the long-arm statute's “transaction of business” and “arising from” tests to be uncertain. We determined that we could not “confidently say whether the New York Court of Appeals would conclude that the plaintiffs have made a prima facie showing of jurisdiction under N.Y. C.P.L.R. 302(a)(1). Licci II, 673 F.3d at 73. We therefore certified the following questions to the New York Court of Appeals:

(1) Does a foreign bank's maintenance of a correspondent bank account at a financial institution in New York, and use of that account to effect “dozens” of wire transfers on behalf of a foreign client, constitute a “transact[ion] of business in New York within the meaning of N.Y. C.P.L.R. § 302(a)(1)?

(2) If so, do the plaintiffs' claims under the Anti–Terrorism Act, the ATS, or for negligence or breach of statutory duty in violation of Israeli law, “aris[e] from” LCB's transaction of business in New York within the meaning of N.Y. C.P.L.R. § 302(a)(1)?

Id. at 74–75 (alterations in original).

On March 29, 2012, the Court of Appeals accepted our certified questions. Licci v. Lebanese Canadian Bank, SAL, 18 N.Y.3d 952, 967 N.E.2d 697, 944 N.Y.S.2d 472 (2012). Having heard argument on the case, the Court answered the certified questions in the affirmative. Licci III, 20 N.Y.3d at 341, 984 N.E.2d at 901, 960 N.Y.S.2d at 703. Equipped with this guidance, we now return to the jurisdictional questions presented.5

DISCUSSION

i. Personal Jurisdiction

We review de novo the district court's Rule 12(b)(2) dismissal for lack of personal jurisdiction over the defendant. Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir.2010). “In order to survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists.” Thomas v. Ashcroft, 470 F.3d 491, 495 (2d Cir.2006). In evaluating whether the requisite showing has been made, we construe the pleadings and any supporting materials in the light most favorable to the plaintiffs. Chloé, 616 F.3d at 163.

Determining personal jurisdiction over a foreign defendant in a federal-question case such as this requires a two-step inquiry. First, we look to the law of the forum state to determine whether personal jurisdiction will lie. See Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242 (2d Cir.2007). If...

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    ...Co. v. Superior Ct. of Cal., San Francisco Cnty., 137 S. Ct. 1773, 1776(2017). (198.) Licci ex ret. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161. 171 (2d. Cir. (199.) See Fischbarg v. Doucet. 880 N.E.2d 22. 26 (N.Y. 2007) ("fJlurisdiction is proper even though the defendant never ente......

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