Strauss v. Crédit Lyonnais, S.A.

• Decision Date: 28 February 2013
• Docket Number: Nos. 06–cv–702 (DLI)(MDG), 07–cv–914 (DLI)(MDG).,s. 06–cv–702 (DLI)(MDG), 07–cv–914 (DLI)(MDG).
• Citation: 925 F.Supp.2d 414
• Parties: Moses STRAUSS, et al., Plaintiffs, v. CRÉDIT LYONNAIS, S.A., Defendant. Bernice Wolf, et al., Plaintiffs, v. Crédit Lyonnais, S.A., Defendant.
• Court: U.S. District Court — Eastern District of New York

925 F.Supp.2d 414

Moses STRAUSS, et al., Plaintiffs,

v.CRÉDIT LYONNAIS, S.A., Defendant.

Bernice Wolf, et al., Plaintiffs,

v.Crédit Lyonnais, S.A., Defendant.

Nos. 06–cv–702 (DLI)(MDG), 07–cv–914 (DLI)(MDG).

United States District Court,

E.D. New York.

Feb. 28, 2013.

Aaron Schlanger, Gary M. Osen, Ari Ungar, Cindy T. Schlanger, Naomi B. Weinberg, Osen, LLC, Hackensack, Peter Raven–Hansen, Osen, LLC, Oradell, NJ, David J. Strachman, McIntyre, Tate, Lynch & Holt, Providence, RI, Steven M. Steingard, Neil L. Glazer, Stephen H. Schwartz, Kohn, Swift & Graf, PC, Philadelphia, PA, Aitan David Goelman, Semra Aylin Mesulam, Washington, DC, Andrew David Friedman, Wechsler, Harwood, Halebian & Feffer, L.L.P., New York, NY, Clyde T. Turner, Turner and Associates, North Little Rock, AR, for Plaintiffs.

Jonathan I. Blackman, Cleary, Gottlieb, Steen & Hamilton, Lawrence B. Friedman, Barbara Ann Ryan, Mark J. Aaronson, Mark B. Feinstein, Aaronson, Rappaport, Feinstein & Deutsch, New York, NY, for Defendant.

OPINION AND ORDER

DORA L. IRIZARRY, District Judge.

Over 200 individuals and estates of deceased persons (collectively, “Plaintiffs”), brought this consolidated action against defendant Crédit Lyonnais, S.A. (“Defendant”), seeking to recover damages from fifteen terrorist attacks in Israel and Palestine pursuant to the civil liability provision of the Antiterrorism Act of 1992 (“ATA”), 18 U.S.C. § 2333(a) (“Section 2333(a)”). Defendant moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. In addition, a group of Plaintiffs who seek damages related to one of the fifteen attacks, a September 9, 2003 terrorist attack at the Café Hillel in Jerusalem, (“Café Hillel Plaintiffs”),¹ cross-moved for summary judgment as to liability against Defendant. For the reasons set forth below, Defendant's motion is denied in part and granted in part, and the Café Hillel Plaintiffs' motion is denied in part and granted in part.

BACKGROUND²

I. The Parties

Plaintiffs' claims arise from fifteen attacks in Israel and Palestine that occurred between March 27, 2002 and September 24, 2004, which Plaintiffs allege were perpetrated by the Palestinian organization, Hamas. (Def.'s Am. Statement of Material Facts, Strauss Dkt. Entry 295 (“CL's 56.1 Stmnt.”), ¶ 251; Pls.' Resp. to Def.'s Am. Statement of Material Facts, Strauss Dkt. Entry 297 (“Pls.' 56.1 Resp.”) ¶ 251.) ³ Plaintiffs comprise over 200 United States citizens who were injured in the terrorist attacks, the estates of those killed in the terrorist attacks and/or are family members of people killed or injured in the terrorist attacks. ( See 3d Am. Compl., Strauss Dkt. Entry 127 (“Strauss 3d Am. Compl.”), ¶¶ 5–572; Compl., Wolf Dkt. Entry 1 (“Wolf Compl.”), ¶¶ 5–313.)

Defendant is a financial institution incorporated and headquartered in France that also does business in the United States. (CL's 56.1 Stmnt. ¶ 1; Pls.' 56.1 Resp. ¶ 1.)

II. CBSP

The Comite de Bienfaisance et de Secours aux Palestiniens (“Committee for PalestinianWelfare and Relief”)(“CBSP”) is a non-profit organization registered in France and currently headquartered in Paris. (CL's 56.1 Stmnt. ¶ 2; Pls.' Resp. ¶ 2.) CBSP opened an account with Defendant in May 1990, and opened three additional accounts with Defendant in 1993. (CL's 56.1 Stmnt. ¶ 3; Pls.' 56.1 Resp. ¶ 3.) CBSP indicated in the account opening documentation it provided to Defendant that it collects funds for humanitarian aid that it transfers to various charitable organizations in the West Bank and Gaza and surrounding areas. (CL's 56.1 Stmnt. ¶ 2; Pls.' 56.1 Resp. ¶ 2.)

During the period relevant to this case, neither France nor the European Union included CBSP on any lists of persons subject to the freezing of assets or supervision of their financial transactions. (CL's 56.1 Stmnt. ¶ 114; Pls.' 56.1 Resp. ¶ 114.) However, on August 21, 2003, the United States Treasury Office of Foreign Assets Control (“OFAC”) listed CBSP as a “Specially–Designated Global Terrorist” (“SDGT”). (CL's 56.1 Stmnt. ¶ 116; Pls.' 56.1 Resp. ¶ 116.) In the press release issued by the Department of Treasury's Office of Public Affairs announcing the designation, CBSP was described as a primary fundraiser for Hamas in France that has “collected large amounts of money ..., which it then transfers to sub-organizations of Hamas.” (Decl. of Joel Israel, Wolf Dkt. Entry 182–4 (“Israel Decl.”) Ex. 31 at 5.) Hamas already had been designated as a Foreign Terrorist Organization (“FTO”) in 1997 by the United States. (CL's 56.1 Stmnt. ¶¶ 299–301; Pls.' 56.1 Resp. ¶¶ 299–301.) The press release announcing CBSP's designation also stated that CBSP had worked “in collaboration with more than a dozen humanitarian organizations based in different towns in the West Bank and Gaza and in Palestinian refugee camps in Jordan and Lebanon.” (Israel Decl. Ex. 31 at 5.) In addition, in 1997, the Israeli government had designated CBSP as a “terrorist organization” under the Prevention of Terrorism Ordinance and an “unlawful organization” under Israel's Defense (Emergency) Regulations. (CL's 56.1 Stmnt. ¶ 125; Pls.' 56.1 Resp. ¶ 125.)

III. The Charities

While CBSP had accounts with Defendant, it transferred money to “13 Charities” ⁴ Plaintiffs contend were “alter egos” of Hamas. (CL's 56.1 Stmnt. ¶¶ 284, 299–301; Pls.' 56.1 Resp. ¶¶ 284, 299–301.) The United States, however, did not designate any of the transferees of funds from CBSP's accounts as SDGTs before August 21, 2003. (CL's 56.1 Stmnt. ¶ 117; Pls.' 56.1 Resp. ¶ 117.)

The boards of directors of at least some of the 13 Charities included members of Hamas. (CL's 56.1 Stmnt. ¶ 317; Pls.' 56.1 Resp. ¶ 317.) Each of the 13 Charities maintained its own bank accounts in either its own name or the names of the treasurer or the head of the entity. (CL's 56.1 Stmnt. ¶¶ 322–23; Pls.' 56.1 Resp. ¶¶ 322–23.)

IV. Defendant's Suspicions About CBSP's AccountsA. Defendant's Initial Suspicions

From 1997 through 2003, activity in CBSP's accounts was monitored by Defendant's unit responsible for the prevention of fraud and money laundering, which became known as the Financial Security Unit (“FSU”). (CL's 56.1 Stmnt. ¶ 5; Pls.' 56.1 Resp. ¶ 5.) The FSU's Committee for the Prevention of Money Laundering and Fraud (“CPML”) was the body within the FSU responsible for analyzing information it received about suspicious activity by Defendant's customers, including CBSP, and then evaluating what steps should be taken based on that information. (CL's 56.1 Stmnt. ¶ 9; Pls.' 56.1 Resp. ¶ 9.)

In 1997, Robert Audren, the individual at the FSU in charge of monitoring activities in CBSP's accounts, opened an investigative file on CBSP's accounts. ( See Decl. of Aitan D. Goelman, Strauss Dkt. Entry 299 (“Goelman Decl.”), Ex. 11 at 21–22, 46.) Audren opened the investigative file after the accounts were brought to Audren's attention by employees at the local branch where CBSP maintained its accounts. ( See id. 22.) Audren testified that he believed the local branch brought the accounts to his attention because “Associations” “are not very common types of accounts in a branch and an account which through its title or through its name raised questions.” ( Id.) During his review, Audren requested back-up information for transfers to several of the 13 Charities. ( See id. Ex. 11 at 60–66, Exs. 16–18.) Audren testified that he believed the transfers “corresponded or they were at least perfectly coherent with the stated purpose of this Association which was, in fact, welfare and solidarity with Palestine.” ( Id. Ex. 11 at 66.) After reviewing account statements, Audren determined that the account's operation seemed normal and that “the incoming funds were coming from private individuals, seemingly, according to the names of the donors of North African origin and that seemed coherent in people's minds with the account such that it was opened. Now, the way that the funds left the account didn't pose a problem for us.” ( Id. 28.)

B. Defendant Reports CBSP to the French Government

In late fall of 2000, Audren became aware of what he perceived to be large and unexplained increases in the number and amounts of deposits into CBSP's main account coming from sources he was unable to identify. (CL's 56.1 Stmnt. ¶ 20; Pls.' 56.1 Resp. ¶ 20.) Audren concluded that the increase in the number and amounts of unidentifiable inflows made the origins of the deposits more opaque. (CL's 56.1 Stmnt. ¶ 21; Pls.' 56.1 Resp. ¶ 21.) More specifically, Audren testified that, “[i]n terms of the names of the donors there is no opacity. As for the origin of the funds contributed by the donors, well, I don't know them personally.” (Goelman Decl. Ex. 15 at 114–15.) According to Audren, he believed that the large increase in cash flows indicated that CBSP's main account might have been used for money laundering. (Decl. of Emily P. Eckstut, Strauss Dkt. Entry 316 (“Eckstut Decl.”) Ex. 2 ¶ 4.)

On December 19, 2000, Audren drafted for the CPML's review what he referred to as a “pre-declaration,” describing the suspicious activity in CBSP's main account. (CL's 56.1 Stmnt. ¶ 26; Pls.' 56.1 Resp. ¶ 26.) In the pre-declaration, Audren described CBSP's activities as “[c]ollection of funds from ‘supporters' ⁵ and individual donors, then transfers to banks established in LEBANON or PALESTINE, to non-resident charitable and/or Islamic associations.” (Eckstut Decl. Ex. 32.) Audren described his “reason for suspicion” as:

Essentially, the increased amount. The movements, up to now, apparently compatible with a collection provided by individuals, by checks, wire transfers, cash for low amounts, increased in October, November 2000 ..., mainly by increasing payments in cash, both in number and amounts. Similarly, the check deposits grew and the current main account balance is now often around one million francs. If the events in ISRAEL partly explain this new increase in support, the source of funds...