Smith v. The Islamic Emirate of Afg. (In re Terrorist Attacks)

• Decision Date: 21 February 2023
• Docket Number: 03 MDL 1570 (GBD) (SN)
• Parties: IN RE: TERRORIST ATTACKS ON SEPTEMBER 11, 2001 This document relates to: Smith v. The Islamic Emirate of Afghanistan, et al., No. 01-cv-10132 Ashton, et al. v. Al Qaeda Islamic Army, et al, No. 02-cv-6977 Havlish, et al. v. Bin Laden, et al, No. 03-CV-9848 Fed. Ins. Co. et al. v. Al Qaida, et al, No. 03-CV-6978 John Does I Through 7 v. The Taliban, et al., No. 20-mc-740
• Court: U.S. District Court — Southern District of New York

IN RE: TERRORIST ATTACKS ON SEPTEMBER 11, 2001 This document relates to: Smith v. The Islamic Emirate of Afghanistan, et al., No. 01-cv-10132

Ashton, et al. v. Al Qaeda Islamic Army, et al, No. 02-cv-6977

Havlish, et al. v. Bin Laden, et al, No. 03-CV-9848

Fed. Ins. Co. et al. v. Al Qaida, et al, No. 03-CV-6978

John Does I Through 7 v. The Taliban, et al., No. 20-mc-740

No. 03 MDL 1570 (GBD) (SN)

United States District Court, S.D. New York

February 21, 2023

MEMORANDUM DECISION AND ORDER

GEORGE B. DANIELS, UNITED STATES DISTRICT JUDGE:

In this multidistrict litigation, four groups of judgment creditors ("Judgment Creditors")^[1] with judgments against the Taliban stemming from the terrorist attacks on September 11 2001 (the "9/11 Attacks") moved for turnover to satisfy their judgments with assets in the name of Afghanistan's central bank, Da Afghanistan Bank ("DAB"), held at the Federal Reserve Bank of New York (the "FRBNY"). (ECF Nos. 7763, 7767, and 7936 in No. 03-md-1570; ECF No. 62 in No. 01-cv-10132; ECF No. 597 in No. 03-CV-9848.)^[2] Before this Court is Magistrate Judge Sarah Netburn's August 26, 2022 Report and Recommendation (the "Report"), recommending that this Court deny the Judgment Creditors' motions and not allow Judgment Creditors of the Taliban to satisfy their judgments with DAB funds. (See Report ECF No. 8463, at 2.) Magistrate Judge Netburn advised the parties that failure to file timely objections to the Report would constitute a waiver of those objections on appeal. (Id. at 42-43.) Judgment Creditors filed objections on November 10, 2022, (see Objections, ECF No 8733),^[3] and amicus curiae Mr. Naseer A. Faiq, the Charge de Affaires of the Permanent Mission of the Islamic Republic of Afghanistan, responded to those objections on November 25, 2022, (see Faiq Nov. 25, 2022 Letter, ECF No. 8773).^[4]

Because the parties filed timely objections, this Court undertakes a de novo review of the Report. After doing so, this Court ADOPTS Magistrate Judge Netburn's Report in finding that this Court lacks subject-matter jurisdiction over the turnover motions under the FSIA, (Report at 12-26), and that this Court is constitutionally restrained from determining the Taliban is the legitimate government of Afghanistan as required to attach DAB's assets, (Report at 27-37).^[5] For the reasons stated herein, the Judgment Creditors' turnover motions are DENIED.

I. LEGAL STANDARD

A court "may accept, reject, or modify, in whole or in part, the findings or recommendations" set forth in a magistrate judge's report. 28 U.S.C. § 636(b)(1)(C). The court must review de novo the portions of a magistrate judge's report to which a party properly objects. Id. The court, however, need not conduct a de novo hearing on the matter. See United States v. Raddatz, 447 U.S. 667, 675-76 (1980). Rather, it is sufficient that the court "arrive at its own, independent conclusion" regarding those portions of the report to which objections are made. Nelson v. Smith, 618 F.Supp. 1186, 1189-90 (S.D.N.Y. 1985) (citation omitted).

Portions of a magistrate judge's report to which no or "merely perfunctory" objections are made are reviewed for clear error. See Edwards v. Fischer, 414 F.Supp.2d 342, 346-47 (S.D.N.Y. 2006) (citations omitted). The clear- error standard also applies if a party's "objections are improper-because they are 'conclusory,' 'general,' or 'simply rehash or reiterate the original briefs to the magistrate judge.'" Stone v. Comm'r of Soc. Sec., No. 17-cv-569 (RJS)fKNF), 2018 WL 1581993,at*3 (S.D.N.Y. Mar. 27,2018) (citation omitted). Clear error is present when "upon review of the entire record, [the court is] 'left with the definite and firm conviction that a mistake has been committed.'" United States v. Snow, 462 F.3d 55, 72 (2d Cir. 2006) (citation omitted).

II. BACKGROUND

A. Afghanistan and 9/11

The 9/11 Attacks resulted in the murder of nearly three thousand innocent people and injuries to thousands more.^[6] In the ensuing days, U.S. President George W. Bush launched a global military campaign to respond to the 9/11 Attacks and counter international terrorism. Since 1996, the Taliban had de facto control over the Islamic Emirate of Afghanistan, although the United States did not recognize the Taliban as Afghanistan's government.^[7] President Bush demanded that the Taliban permanently close terrorist training camps within Afghanistan's borders and hand over those responsible for the 9/11 Attacks, principally al Qaeda leader Osama bin Laden. (See Smith, No. 01-cv-10132, ECF No. 63-3, Clayton Thomas, Cong. RSCH. Serv., Taliban Government in Afghanistan: Background and Issues for Congress 2 (2021) ("Taliban Background").) When the Taliban refused, the United States and coalition allies invaded Afghanistan on October 7, 2001 as part of Operation Enduring Freedom. See Id. 2-3. Taliban forces fled Kabul, and the Islamic Emirate of Afghanistan collapsed within weeks. Id. The United Nations helped form an interim, and then transitional, government backed by U.S. and allied forces, culminating in the formation of the Islamic Republic of Afghanistan (the "Republic") in 2004. See Id. at 3, 28.

Following a brutal war spanning two decades, the Taliban has returned to power in Afghanistan. During the administration of President Donald Trump, a February 2020 U.S.-Taliban agreement stipulated that the United States and its allies would fully withdraw all international forces from Afghanistan by May 2021. In April 2021, President Joseph Biden postponed this deadline to August of the same year. Id. at 6-7. The Taliban soon thereafter began a sweeping military offensive, capturing large swaths of Afghanistan before finally entering Kabul to overthrow the Republic on August 15, 2021. See Id. at 7-8. Although U.S. forces managed to evacuate approximately 124,000 people up until the last American soldier left Afghanistan on August 30, 2021, the chaotic final days of U.S. presence coincided with a catastrophic suicide bombing at Kabul's international airport and stranded hundreds of U.S. citizens and tens of thousands of Afghans who had worked with the United States. See Id. at 22-23.

The people of Afghanistan then faced a relentless barrage of calamities. Up to 97 percent of Afghans may fall into poverty amid the collapse of the banking sector, and more than a million children are at risk of dying of starvation. (See Report at 4 (citing Faiq Am. Amicus Br., ECF No. 7932-1, at 2-3).) Some families have resorted to selling bodily organs or their own children to afford food. (See Id. (citing Afghan Civ. Soc'y Orgs. Amicus Br., ECF No. 7896-1, at 5; also citing Faiq Am. Amicus Br. at 3).) The Taliban is ruthlessly hunting down journalists, civil society leaders, women activists, religious and ethnic minorities, former Republic officials, and former Afghan security forces who served with U.S.-allied forces. (See id (citing Afghan Civ. Soc'y Orgs. Amicus Br. at 6).) After issuing edicts banning women from attending high school or college, the Taliban recently imposed a ban on women conducting humanitarian work, endangering approximately 28 million Afghans who desperately need assistance to survive a harsh winter, economic collapse, and the risk of famine. See UN and Top Aid Officials Slam Afghan Rulers' NGO Ban for Women, UN News (Dec. 29, 2022), https://news.un.org/en/story/2022/12/1132082.

As before, the United States does not recognize the Taliban regime as the de jure government of Afghanistan. (See Report at 4 (citing U.S. Statement of Interest, ECF No. 7661, at 34.) Indeed, no country in the world does. See, e.g., Belquis Ahmadi & Scott Worden, The Taliban Continue to Tighten Their Grip on Afghan Women and Girls, U.S. Instit. Peace (Dec. 8, 2022), https://www.usip.org/publications/2022/12/taliban-continue-tighten-their-grip-afghan-women-and-girls.

B. Da Afghanistan Bank

DAB has been the central bank of Afghanistan since its founding in 1939. (Report at 4 (citing Decl. Alex Zerden, ECF No. 7766 ¶ 16).) When the Republic fell in August 2021, DAB held approximately $7 billion in assets at the FRBNY. (Id. (citing Havlish Mem. of Law on Mot. for Turnover, ECF No. 7764). Most of these funds came from international donors and the savings of Afghan citizens. (Id. (citing Faiq Am. Amicus Br. at 19 n.18).) The U.S. Treasury Department blocked the assets on August 15, 2021-the same day that the Taliban entered Kabul. (Id. (citing Taliban Background at 39).) While the action helped ensure that the funds would not fall into Taliban hands, it further exacerbated Afghanistan's humanitarian crisis because Afghan "banks were unable to lend money and citizens [were] unable to withdraw their own funds." (Id. (citing Afghan Civ. Soc'y Orgs. Amicus Br. at 5).)

In February 2022, President Biden issued an executive order titled "Protecting Certain Property of Da Afghanistan Bank for the Benefit of the People of Afghanistan." Exec. Order No. 14,064, 87 Fed.Reg. 8391 (Feb. 11, 2022) ("E.O. 14,064"). The order addressed the frozen assets and stated that "the preservation of certain property of Da Afghanistan Bank (DAB) held in the United States by United States financial institutions is of the utmost importance to addressing this national emergency and the welfare of the people of Afghanistan." Id. Executive Order 14,064 determined that "the widespread humanitarian crisis in Afghanistan-including the urgent needs of the people of Afghanistan for food security, livelihoods support, water, sanitation, health, hygiene, shelter and settlement assistance, and COVID-19-related assistance, among other basic human needs" constituted an "unusual and extraordinary threat to the national security and foreign policy of the United States." (Report at 5 (quoting E.O....