Ungar v. Palestine Liberation Organization, 04-2079.

• Decision Date: 31 March 2005
• Docket Number: No. 04-2079.,04-2079.
• Citation: 402 F.3d 274
• Parties: Efrat UNGAR et al., Plaintiffs, Appellees, v. The PALESTINE LIBERATION ORGANIZATION et al., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 274

402 F.3d 274

Efrat UNGAR et al., Plaintiffs, Appellees, v. The PALESTINE LIBERATION ORGANIZATION et al., Defendants, Appellants.

No. 04-2079.

United States Court of Appeals, First Circuit.

Heard January 3, 2005.

Decided March 31, 2005.

Ramsey Clark, with whom Lawrence W. Schilling, Deming E. Sherman, and Edwards

& Angell, LLP were on brief, for appellants.

David J. Strachman, with whom McIntyre, Tate, Lynch & Holt was on brief, for appellees.

Daniel J. Popeo, Richard A. Samp, Joel J. Sprayregen, and Jared M. Wayne on consolidated brief for Washington Legal Foundation and Allied Educational Foundation, amici curiae.

Before SELYA, Circuit Judge, CAMPBELL, Senior Circuit Judge, and LIPEZ, Circuit Judge.

SELYA, Circuit Judge.

This appeal raises exceptionally important questions of justiciability and sovereignty, emblematic of unsettled political conditions that have plagued the Middle East for many years. In it, the Palestinian Authority (PA) and the Palestine Liberation Organization (PLO) ask us to countermand the district court's refusal to dismiss the action against them. They contend that the case hinges on a nonjusticiable political question and that, at any rate, the defendants enjoy sovereign immunity. In the event that these arguments do not carry the day, the defendants seek vacation of two $116,000,000-plus default judgments, one entered against each of them, on the ground that they were entitled to a binding determination of sovereign immunity (including appellate review of any unfavorable decision) before being forced to bear the burdens of litigation.

After careful consideration of the relevant legal authorities and perscrutation of an amplitudinous record, we conclude that this case is justiciable; that the defendants have not established an entitlement to sovereign immunity; and that the defendants' strategic litigation choices undercut their arguments as to the sequencing of the litigation. Consequently, we affirm the judgment below.

I. BACKGROUND

This case had its genesis in a terrorist attack that occurred in Israel on June 9, 1996. On that date, Yaron Ungar (a citizen of the United States), his wife Efrat, and their infant son Yishai were driving home from a wedding. Near Beit Shemesh, a car approached the Ungars' vehicle and loosed a salvo of machine-gun fire, killing both Yaron and Efrat. The three occupants of the attacking vehicle were all members of the Hamas Islamic Resistance Movement (Hamas), a group designated as a terrorist organization by the United States Department of State. See 8 U.S.C. § 1189; Redesignation of Foreign Terrorist Organizations, 68 Fed.Reg. 56,860, 56,861 (Oct. 2, 2003). The authorities apprehended the three assailants and, soon after, arrested a fourth Hamas member as an accessory. An Israeli court convicted all four men.

David Strachman was appointed as the administrator of the estates of Yaron and Efrat Ungar. On March 13, 2000, Strachman and other plaintiffs filed suit in the United States District Court for the District of Rhode Island pursuant to the Anti-Terrorism Act (ATA), 18 U.S.C. §§ 2331-2338. That statute provides a cause of action in favor of any "national of the United States injured in his or her person, property, or business by reason of an act of international terrorism, or his or her estate, survivors, or heirs." Id. § 2333(a). Venue for such an action may be laid in, inter alia, "any district where any plaintiff resides," id. § 2334(a), and the plaintiff(s) may recover treble damages, costs, and attorneys' fees, id. § 2333(a).

The original complaint set forth both ATA and state law claims. It was brought by numerous plaintiffs against numerous defendants. We need not call the roll; for all practical purposes, the case boils down to a suit involving the estate and heirs of Yaron Ungar as plaintiffs and the PA and the PLO as defendants.¹ The centerpiece of the complaint was an allegation that the defendants had engaged in international terrorism within the purview of the ATA. See id. § 2331(1).

On an ensuing motion to dismiss, the district court rejected an assertion that the PA and the PLO were immune from service of process. Estates of Ungar ex rel. Strachman v. Palestinian Auth., 153 F.Supp.2d 76, 90-91 (D.R.I.2001) (Ungar I). However, the court dismissed the state law claims, finding that Rhode Island choice-of-law principles favored the application of Israeli law. Id. at 98-99.

The plaintiffs served an amended complaint on August 23, 2001, asserting one claim under the ATA and three Israeli law claims, all on behalf of the estate and heirs of Yaron Ungar. The PA and the PLO moved to dismiss the amended complaint on essentially the same grounds as previously urged, adding only that the claims were nonjusticiable. Alternatively, they sought to have the district court certify, pursuant to 28 U.S.C. § 1292(b),² various questions, including a question as to whether the defendants were entitled to a non-specific "functional" immunity "arising from the peculiar status of the PA as a functioning governmental entity." At that point, the defendants were not claiming statehood; they argued only that the policy considerations underlying the ATA's recognition of immunity for foreign states "appl[ied] equally" to them.

The PA and the PLO later changed their position. On January 30, 2002 — during the pendency of their motion to dismiss the amended complaint — they jointly moved for "leave to assert defenses." In the memorandum accompanying that motion, they for the first time claimed an immunity from suit based on sovereignty. They explained that they initially had chosen not to seek immunity on the basis of statehood and suggested that emergent political events in their region had caused a change of plan. The motion for leave to assert defenses was a curiosity — the defendants had not yet answered the amended complaint and were free to assert, by motion to dismiss or otherwise, any colorable defense — and the district court never acted on it.

In the same time frame, the defendants moved for a stay of discovery and the plaintiffs moved for an order compelling discovery. The court granted the requested stay pending resolution of the motion to dismiss the amended complaint. On November 4, 2002, the district court denied the dismissal motion and dissolved the stay. The court flatly rejected the claim of nonjusticiability. Estates of Ungar ex rel. Strachman v. Palestinian Auth., 228 F.Supp.2d 40, 44-47 (D.R.I.2002) (Ungar II). It also determined that the amended complaint stated claims upon which relief could be granted both under the ATA and under Israeli law. Id. at 47-48. Finally, the court reiterated its earlier rejection of the defendants' claim of immunity from service of process and added that the PA, as a governmental entity, was not a sovereign state immune from suit under the ATA. Id. at 48-49. Finally, the court declined the defendants' invitation to certify questions for interlocutory review. Id. at 49-51 (citing Klinghoffer v. S.N.C. Achille Lauro, 937 F.2d 44, 47-49 (2d Cir.1991)).

The PA and the PLO moved for reconsideration and again asked for a stay. Some two months later, the district court granted the plaintiffs' outstanding motion to compel discovery, giving the defendants additional time to respond due to their overseas location. The defendants nonetheless moved for reconsideration of the discovery order and submitted a letter from Palestine's permanent observer at the United Nations, which stated that the defendants could not be expected to respond to discovery due to the unremitting violence in the region. The letter suggested that the defendants should be allowed to wait until there was a final decision on the jurisdictional question before being forced to attend to the discovery requests.

On February 7, 2003, the plaintiffs moved for an entry of default based on the defendants' failure to answer the amended complaint. Six weeks later, the district court denied the defendants' pending motion to reconsider the order compelling discovery. On April 11, the court held a hearing on the defendants' outstanding motion to reconsider its decision in Ungar II. The court indicated from the bench that it would deny both that motion and the concomitant request for a stay, but it did not actually enter such an order until April 22, 2003. Meanwhile, a magistrate judge entered the requested default, concluding that the defendants' failure to answer the amended complaint and their refusal to participate in discovery were the result of a deliberate strategic choice. The default was posted on the docket on April 21, 2003.

The defendants filed a notice of appeal to this court on April 23, 2003, in which they sought interlocutory review of both the lower court's decision in Ungar II and that court's refusal to reconsider that decision. They averred that they had been deprived of the opportunity to make a showing of sovereign immunity because the district court failed to take action on their motion for leave to assert a sovereign immunity defense, yet proceeded to determine that the defendants had no entitlement to immunity. We summarily affirmed the orders appealed from, noting that the defendants had neither moved to dismiss on the ground of sovereign immunity nor attempted, in the lower court, to make the evidentiary showing required to sustain such a defense. Ungar v. Palestinian Liberation Org., No. 03-1544, 2003 WL 21254790, at *1 (1st Cir. May 27, 2003) (per curiam) (unpublished). We added that the defendants' motion for leave to assert a defense was wholly gratuitous, as they did not need the court's permission to raise the sovereign immunity issue at that stage of the case. See id.

We issued our order without prejudice to the defendants' future efforts to press their newly asserted sovereign immunity defense in an appropriate fashion. See id. (admonishing that the defendants "must adhere to the rules that govern all...