Rubin v. Islamic Republic of Iran

• Citation: 709 F.3d 49
• Decision Date: 27 February 2013
• Docket Number: No. 11–2144.,11–2144.
• Parties: Jenny RUBIN, et al., Plaintiffs, Appellants, v. ISLAMIC REPUBLIC OF IRAN, et al., Defendants, Harvard University, et al., Trustees, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

709 F.3d 49

Jenny RUBIN, et al., Plaintiffs, Appellants,

v.ISLAMIC REPUBLIC OF IRAN, et al., Defendants,Harvard University, et al., Trustees, Appellees.

No. 11–2144.

United States Court of Appeals,First Circuit.

Feb. 27, 2013.

Meir Katz, with whom Robert J. Tolchin and The Berkman Law Office, LLC were on brief, for appellants.

Paul R.Q. Wolfson, with whom Mark C. Fleming, Sydenham B. Alexander, III, Shirley X. Li Cantin, Janet R. Carter, and Wilmer Cutler Pickering Hale and Dorr LLP were on brief, for appellee Harvard University.

Simon J. Frankel, with whom Covington & Burling LLP, Robert J. Muldoon, Jr., Thomas Paul Gorman, and Sherin and Lodgen LLP were on brief, for appellee Museum of Fine Arts, Boston.

Benjamin M. Shultz, with whom Mark B. Stern and Sharon Swingle, Attorneys, Appellate Staff, Civil Division, U.S. Department of Justice, Stuart F. Delery, Acting Assistant Attorney General, Carmen M. Ortiz, United States Attorney, Matthew Tuchband, Acting Chief Counsel, Office of Foreign Assets Control, U.S. Department of the Treasury, and Harold Hongju Koh, Legal Advisor, U.S. Department of State, were on brief, for amicus curiae United States.

Before HOWARD, STAHL, and LIPEZ, Circuit Judges.

STAHL, Circuit Judge.

The plaintiffs-appellants in this case are United States citizens who were injured in a 1997 terrorist attack that Hamas orchestrated in Jerusalem. They sued the Islamic Republic of Iran in the United States District Court for the District of Columbia, alleging that Iran had provided material support to Hamas and was therefore liable for the attack. In 2003, the plaintiffs obtained a default judgment against Iran. Campuzano v. Islamic Rep. of Iran, 281 F.Supp.2d 258 (D.D.C.2003). Seeking to collect on that judgment, they moved to attach, by trustee process action in the District of Massachusetts, certain antiquities that they claim are the property of Iran but that are currently in the possession of the defendants-appellees, the Museum of Fine Arts, Boston (MFA) and Harvard University (collectively, “the Museums”).

After several years of litigation, the district court granted the Museums' motions to dissolve the attachments, concluding that the Museums could invoke the objects' immunity from attachment under the Foreign Sovereign Immunities Act, and that although the Terrorism Risk Insurance Act provided a potential way around that immunity, the plaintiffs had failed to meet their burden of proving that the antiquities in question were attachable under that statute. We agree with the district court that the trustee attachments should be dissolved, though we take a narrower path to reach that conclusion.

I. Facts & Background

This action began in 2005, when the plaintiffs registered their default judgment against Iran ¹ in the District of Massachusetts and moved for orders of attachment by trustee process against all “antiquities ... that are the property of the Islamic Republic of Iran” in the possession of the Museums. SeeFed.R.Civ.P. 69. At issue are approximately 500 objects in Harvard's possession and approximately 1,485 objects held by the MFA that originated in or near the area covered by the current borders of Iran, including stone reliefs, sculptures, and archaeological specimens.

The Museums moved to quash the trustee process summonses and dissolve the attachments, arguing that Iran did not own the antiquities and that, even if it did, the antiquities would be immune under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1602–1611, which provides that “the property in the United States of a foreign state shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter,” id. § 1609.

The plaintiffs responded with three arguments, raised in a motion for partial summary judgment and an opposition to the motion to quash: (1) the Museums did not have standing to assert sovereign immunity on behalf of Iran; (2) even if they did, the “commercial use” exception to immunity under the FSIA would apply, see id. § 1610(a)(7); and (3) in any event, the plaintiffs could reach the antiquities under section 201(a) of the Terrorism Risk Insurance Act of 2002 (TRIA), Pub.L. No. 107–297, § 201(a), 116 Stat. 2322, 2337 (2002) (codified at 28 U.S.C. § 1610 note), which permits the attachment of certain “blocked assets of [a] terrorist party.” The district court found it appropriate to consider whether the antiquities were immune under the FSIA and determined that the “commercial use” exception did not apply, but concluded that the plaintiffs might still be able to attach the antiquities under section 201(a) of TRIA if they could prove that the antiquities belonged to Iran. Rubin v. Islamic Rep. of Iran ( Rubin I ), 456 F.Supp.2d 228 (D.Mass.2006).

The Museums moved for reconsideration of the district court's ruling that the antiquities qualified as “blocked assets” under TRIA, and the court issued a second order declining to alter its previous ruling but explaining it in further detail. Rubin v. Islamic Rep. of Iran ( Rubin II ), 541 F.Supp.2d 416 (D.Mass.2008). The court also certified for interlocutory appeal, see28 U.S.C. § 1292(b), its rulings regarding the applicability of section 201(a) of TRIA, the issue of whether a foreign sovereign's immunity under the FSIA may only be raised by that sovereign, and the question of whether the “commercial use” exception applied, Rubin II, 541 F.Supp.2d at 421. The parties filed petitions for leave to appeal, which we denied, finding that aspects of the legal question of immunity might be bound up with the factual question of ownership and preferring to resolve the immunity question after ownership had been ascertained. Rubin v. Islamic Rep. of Iran, Nos. 08–8020 & 08–8021 (1st Cir. Aug. 11, 2008).

Discovery proceeded, and the Museums once again moved to dissolve the attachments. This time, the district court granted their motions. The court found that, as judgment creditors, the plaintiffs bore the burden of proving that any object on which they sought to execute belonged to Iran, that TRIA did not alter that burden, and that, “despite extensive discovery,” the plaintiffs were “unable to sustain their burden of showing that any particular item held by the Museums is the property of Iran subject to execution by means of trustee process.” Rubin v. Islamic Rep. of Iran ( Rubin III ), 810 F.Supp.2d 402, 404 (D.Mass.2011). The court examined two Iranian laws that the plaintiffs had invoked, one from 1930 and another from 1928, and concluded that neither vested ownership of the antiquities in Iran. Id. at 404–06. The court thus dissolved the trustee attachments, and this appeal followed.

II. Analysis

For context, we briefly summarize the complex issues that the parties have put before us, though our resolution of this case does not require us to delve into many of them. The plaintiffs' main argument on appeal is that TRIA preempts state property law, and, when read in conjunction with certain Treasury Department regulations, gives the plaintiffs (in their words) the right to levy against “ any interest of Iran, even if that interest is less than a full ownership interest.” They further claim that Iran has an interest in the antiquities under Iranian law that is sufficient to make them attachable under TRIA.

The Museums, for their part, counter that TRIA does not displace the traditional rule that a judgment creditor may execute only against assets that a judgment debtor owns, and that the district court was correct in concluding that Iranian law does not vest title to the antiquities in Iran. However, the Museums also challenge the district court's finding that the antiquities qualify as “blocked assets” within the meaning of TRIA—a prerequisite for that statute to apply. See TRIA § 201(a). Finally, the Museums urge us to find that, even if Iran owns the antiquities and they are theoretically attachable under TRIA, the plaintiffs' claim is barred under Massachusetts law by the three-year statute of limitations and the Museums' adverse possession of the objects.

Also before us is the position of the United States Department of the Treasury's Office of Foreign Assets Control (OFAC), which is responsible for administering and enforcing economic and trade sanctions, including promulgating the regulations at issue here. The United States has filed an amicus brief articulating OFAC's views regarding two aspects of this case. First, OFAC urges us to find that TRIA authorizes the attachment only of those assets that are owned by the relevant terrorist party. Second, providing its own interpretation of the Treasury Department regulations, OFAC argues that the antiquities are not “contested” within the meaning of those regulations, which, if correct, would make TRIA inapplicable here.

Because we agree with OFAC that the antiquities are not “contested,” and thus conclude that they cannot qualify as “blocked assets” under TRIA, we need not reach the broader questions of whether TRIA preempts state law, what kind of ownership interest suffices for an asset to be attachable under TRIA, whether Iranian law vests title to these antiquities in Iran, or whether the plaintiffs' claims are foreclosed by the Massachusetts statute of limitations or the adverse possession doctrine. Before we turn our attention to the “blocked assets” issue, however, we must address a last-minute attempt by the plaintiffs to overcome the immunity hurdle posed by the FSIA.

A. The FSIA

The FSIA makes “the property in the United States of a foreign state” immune from attachment and execution, subject to certain exceptions, 28 U.S.C. § 1609, one of which permits the attachment of property “used for a commercial activity in the United States,” assuming the underlying judgment “relates to a claim for which the foreign state is not immune under section 1605A or section 1605(a)(7) (as such section was in effect on January 27, 2008),” id. § 1610(a)(...