Spetner v. Palestine Inv. Bank
| Docket Number | 20-3849-cv,August Term 2021 |
| Decision Date | 16 June 2023 |
| Citation | 70 F.4th 632 |
| Parties | Temima SPETNER, Jason Kirschenbaum, Isabelle Kirschenbaum, individually and for the Estate of Martin Kirschenbaum, Joshua Kirschenbaum, Shoshana Burgett, David Kirschenbaum, Danielle Teitelbaum, Netanel Miller, Chaya Miller, Aharon Miller, Shani Miller, Adiya Miller, Altea Steinherz, Jonathan Steinherz, Temima Steinherz, Joseph Ginzberg, Peter Steinherz, Laurel Steinherz, Jacqueline Chambers, individually and as the Administrator of the Estate of Esther Bablar, Levana Cohen, individually and as the Administrator of the Estate of Esther Bablar, Eli Cohen, Sarah Elyakim, Joseph Cohen, Greta Geller, as the Administrator of the Estate of Greta Geller, Ilana Dorfman, as the Administrator of the Estate of Greta Geller, Rephael Kitsis, as the Administrator of the Estate of Greta Geller, Tova Guttman, as the Administrator of the Estate of Greta Geller, Gila Aluf, Shabtai Shatsky, individually and for the Estate of Keren Shatsky, Joanne Shatsky, individually and for the Estate of Keren Shatsky, Tzippora Shatsky Schwarz, Yosef Shatsky, Sara Shatsky Tzimmerman, Miriam Shatsky, David Shatsky, Hillel Trattner, Ronit Trattner, Aron Trattner, Shelley Trattner, Hadassah Diner, Efrat Fine, Yael Hillman, Chana Friedman Edri, Bella Friedman, Reuven Friedman, Yehiel Friedman, Zvi Friedman, Ilan Friedman, Miriam Friedman Schreiber, Steven Braun, Chaviva Braun, Yehuda Braun, Yoni Braun, Eliana Braun Peretz, Oriella Braun, Matanya Braun, Ginette Thaler, individually and for the Estate of Rachel Thaler, Leor Thaler, Michael Thaler, Zvi Thaler, Isaac Thaler, Miriam Ben-Yishai, individually and for the Estate of Shoshana Ben-Yishai, Yitzhak Ben-Yishai, individually and for the Estate of Shoshana Ben-Yishai, Jacob Ben-Yishai, Israel Ben-Yishai, Aviel Ben-Yishai, Chana Ben-Yishai, Yael Ben-Yishai, Myriam Miller, Chana Aidel Miller Schertzman, Tova Miller, Ilana Schertzman Cohen, Leslie Schertzman, Donald Schertzman, Daniel Schertzman, Arielle Schertzman Fisher, Abraham Schertzman, Yehuda Schertzman, Charles O. Morgan, Jr., for the Estate of Gloria Kushner, Leonard Mandelkorn, Ezra Kessler, Hannah Kessler Rosenstein, Klila Kessler, Yitzhak Zahavy, Julie Zahavy, Tzvee Zahavy, Bernice Zahavy, Mark Sokolow, Rena Sokolow, Jamie Sokolow Fenster, Lauren Sokolow Mandelstam, Elana Sokolow Rosman, Alan Bauer, Yehonaton Bauer, Revital Bauer, Binyamin Bauer, Daniel Bauer, Yehuda Bauer, Ludwig Bauer, individually and for the Estate of Ella Bauer, Phillip Bauer, Shoshana Zelcer Weitzman, Shmuel Waldman, Henna Novack, Morris Waldman, Eva Waldman, Chanie Bodenstein, Shaindy Weinberger, Philip Waldman, Abraham Waldman, Dassie Waldman Davis, Leslye Knox, individually and for the Estate of Aharon Ellis, Jordan Ellis, Mello Nee Ellis, individually and for the Estate of Prince Elkannann Ben Shaleak, Ametai Carter, Reuven Carter, Shaanon Carter, Shayrah Carter, Yoshahvyah Carter, Francine Ellis, Lynne Ellis, Shemariyah Ellis, Tsaphrerah Ellis, Yihonadov Ellis, Plaintiffs-Appellants, Arie Miller, Plaintiff, v. PALESTINE INVESTMENT BANK, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
Appeal from the United States District Court for the Eastern District of New York.
Michael Radine (Gary M. Osen, Ari Ungar, Aaron A. Schlanger, on the brief), Osen LLC, Hackensack, NJ, for Plaintiffs-Appellants.
Mitchell R. Berger (Gassan A. Baloul, on the brief), Squire Patton Boggs, New York, NY and Washington, DC, for Defendant-Appellee.
Gregory P. Hansel, Preti, Flaherty, Beliveau & Pachios, Chartered LLP, Portland, ME, for amici curiae Former United States Government Officials.
Douglass A. Mitchell, Jenner & Block LLP, Washington, DC; Mordechai Biser, Abba Cohen, Agudath Israel of America; Nathan J. Diament, Union of Orthodox Jewish Congregations of America; Jonathan L. Sherman, One Israel Fund, Ltd., for amici curiae Agudath Israel of America, Union of Orthodox Jewish Congregations of America, and One Israel Fund, Ltd.; Jonathan M. Rotter, Glancy Prongay & Murray LLP, Los Angeles, CA, for amicus curiae StandWithUs.
Before: Walker, Menashi, and Lee, Circuit Judges.
Plaintiffs-Appellants are American victims, and the relatives and estates of victims, of terrorist attacks in Israel between 2001 and 2003. Plaintiffs allege that Palestine Investment Bank (PIB) facilitated the attacks by knowingly providing financial services to the terrorist organizations that allegedly perpetrated them, in violation of the Anti-Terrorism Act, 18 U.S.C. § 2331-39D. The district court dismissed the case on the ground that it lacked personal jurisdiction over PIB. For the reasons that follow, we VACATE the district court's decision and REMAND for proceedings consistent with this opinion.
The following facts are taken from plaintiffs' complaint and declaration to the extent "they are uncontroverted by [PIB's] affidavits."1 Plaintiffs' claims arise from thirteen attacks allegedly committed by Hamas and terrorists supported by the Arab Liberation Front (ALF) during the "Second Intifada."2
PIB is a commercial bank headquartered in the Palestinian Territories. During the relevant period, PIB maintained a U.S. dollar-denominated checking account for the head of the ALF, a Palestinian proxy for Saddam Hussein's regime in Iraq. Plaintiffs allege that Saddam Hussein's government transferred so-called incentive payments to ALF's account at PIB to support and reward terrorist activities. Plaintiffs estimate that the Iraqi government transferred to ALF between $9.5 million and $35 million, which was ultimately disbursed to families of deceased terrorists, primarily through PIB-issued checks.
PIB also maintained an account for Hamas's U.S.-based fundraising arm, the Holy Land Foundation (HLF). HLF wired dollars from accounts in the United States to its account with PIB in the Palestinian Territories, which was then used to finance Hamas's operations. The United States designated Hamas as a Foreign Terrorist Organization in 1997 and HLF as a Specially Designated Global Terrorist in December 2001.3
During the relevant period, PIB had no offices, branches, or employees in New York. A foreign bank that lacks a physical presence in the United States, such as PIB, cannot directly access U.S.-based payment systems that allow financial institutions to electronically transfer dollar-denominated funds. But it can move funds to and from the United States by using a correspondent banking account, which is an account in a domestic bank that is held in the foreign bank's name.4 PIB did not hold a correspondent banking account in its own name with any bank in the United States. To process dollar-denominated transfers, PIB instead used a correspondent account with the Amman-branch of Arab Jordan Investment Bank (AJIB). AJIB, in turn, held correspondent banking accounts at three banks in New York—Citibank, Chase Manhattan, and Bank of New York Mellon. This practice, sometimes referred to as "nested" correspondent banking, afforded PIB indirect access to New York's financial system and dollar-based transfer services.
AJIB's New York correspondent accounts were the only means it used to process dollar-based transactions. AJIB advertised its correspondent account relationships in trade publications such as the Bankers' Almanac, which listed only the three New York accounts as having dollar-processing capabilities. Because of these public disclosures, PIB knew that the wire transfers had to route through New York. While there are alternatives to processing transactions through New York, PIB did not seek them out, nor did PIB refuse transfers from AJIB despite knowing that they would be routed through New York.
PIB used nested correspondent accounts to funnel dollar-denominated payments from Iraq's government to ALF. From an originating bank, Iraqi funds were sent to AJIB's correspondent account in New York. Once the funds reached AJIB's account, AJIB notified PIB that a transfer was made for the benefit of a PIB account holder, which, in this case, was the head of the ALF. Drawing on these cash infusions from Iraq, the head of the ALF then issued dollar-denominated incentive payment checks from his PIB account to the families of terrorists, including the word "martyr" in the memo line of some checks.
Except for checks issued to ultimate recipients who were also PIB accountholders (which were cleared internally on PIB's books), the incentive payment checks were cleared and settled in New York before reaching their ultimate recipients' accounts at other banks.5
PIB also repeatedly processed payments for HLF. Plaintiffs allege that PIB directed HLF to use AJIB's New York correspondent accounts when transferring funds between HLF's account in the United States and its account with PIB in the Palestinian Territories. Plaintiffs point to at least one transfer from August 2001, in which HLF wired funds from its account in Texas with instructions that the transfer route through AJIB's correspondent account with Chase Manhattan in New York. Because PIB did not advertise its correspondent accounts at the time, plaintiffs suggest that the only way HLF could have known to send its funds to that correspondent account in New York was if PIB had selected the specific account and instructed HLF to use it.
PIB moved to dismiss the complaint on the ground that its connections with New York were too attenuated to subject it to personal jurisdiction. The district court held oral argument on the motion but did not conduct an evidentiary hearing. It granted PIB's motion, ruling that New York's long-arm statute, Civil Practice Law and Rule (C.P.L.R.) § 302, did not authorize jurisdiction over PIB. The district court reasoned that the New York correspondent accounts at issue were not held in PIB's name and that AJIB was not PIB's agent for purposes of § 302. The district court did not reach whether jurisdiction was consistent with the Due...
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