Vera v. Republic of Cuba

• Citation: 867 F.3d 310
• Decision Date: 14 August 2017
• Docket Number: August Term 2016,Docket No. 16-1227
• Parties: Aldo VERA, Jr., as Personal representative of the Estate of Aldo Vera, Sr., Plaintiff-Appellee, v. The REPUBLIC OF CUBA, Defendant, Banco Bilbao Vizcaya Argentaria, S.A., Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

867 F.3d 310

Aldo VERA, Jr., as Personal representative of the Estate of Aldo Vera, Sr., Plaintiff-Appellee,

v.The REPUBLIC OF CUBA, Defendant,Banco Bilbao Vizcaya Argentaria, S.A., Appellant.

Docket No. 16-1227

August Term 2016

United States Court of Appeals, Second Circuit.

Argued: April 18, 2017

Decided: August 14, 2017

Robert A. Swift , Kohn, Swift & Graf, P.C., Philadelphia, PA (Jeffrey E. Glen, Anderson Kill P.C., New York, NY, on the brief), for Plaintiff-Appellee Aldo Vera, Jr.

Kenneth A. Caruso (Christopher D. Volpe, Matthew L. Nicholson, on the brief), White & Case LLP, New York, NY, for Appellant Banco Bilbao Vizcaya Argentaria, S.A.

John J. Clarke, Jr., Richard F. Hans, Kevin Walsh, DLA Piper LLP, New York, NY, for Amici Curiae Institute of International Bankers and European Banking Federation in Support of Appellant.

James L. Kerr, Margaret E. Tahyar, Michael S. Flynn, Alicia Llosa Chang, Caroline Stern, Davis Polk & Wardwell LLP, New York, NY, for Amicus Curiae Banking Law Committee of the New York City Bar Association in Support of Appellant.

Before: POOLER, WESLEY, and CARNEY, Circuit Judges.

Wesley, Circuit Judge:

At the heart of this appeal is an action by Plaintiff-Appellee Aldo Vera, Jr. ("Vera") against the Republic of Cuba for the extrajudicial killing of his father in 1976. In 2008, Vera obtained a default judgment against Cuba in Florida state court, relying on the "terrorism exception" to sovereign immunity, 28 U.S.C. § 1605A(a)(1). Vera then secured a default judgment against Cuba in the United States District Court for the Southern District of New York (Hellerstein, J .), after that court granted full faith and credit to the Florida judgment.

This appeal arises from Vera's efforts to enforce the federal default judgment by serving information subpoenas on the New York branches of various foreign banks. One bank, Appellant Banco Bilbao Vizcaya Argentaria, S.A. ("BBVA"), refused to comply with the subpoena's request for information regarding Cuban assets located outside the United States. BBVA moved to quash the subpoena, contending that Vera's federal default judgment against Cuba was void for lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act of 1976 (the "FSIA"), as amended, 28 U.S.C. §§ 1602 et seq. , and that the District Court lacked the personal jurisdiction over BBVA needed to compel worldwide discovery. The District Court rejected BBVA's jurisdictional challenges and ordered it to provide full and complete answers to Vera's request for information, holding the bank in contempt when it refused to comply.

We reverse. The District Court lacked subject matter jurisdiction over Vera's action against Cuba because Cuba was not designated a state sponsor of terrorism at the time Vera's father was killed, and Vera failed to establish that Cuba was later designated a state sponsor of terrorism as a result of his father's death. Accordingly, the FSIA's terrorism exception to sovereign immunity—the only potential basis for subject matter jurisdiction in this case—does not apply. Cuba was immune from Vera's action, the District Court lacked subject matter jurisdiction to enter judgment against it, and the information subpoena to enforce that judgment is void.

I

Vera's father, Aldo Vera, Sr., was killed in San Juan, Puerto Rico on October 25, 1976. In 2001, Vera brought a civil action against Cuba in Florida state court on behalf of his father's estate. Vera alleged that his father—the former police chief in Havana—fled Cuba in the 1960s and engaged in counterrevolutionary activities in Puerto Rico and Florida. He further alleged that agents acting on orders of the Cuban government executed Vera's father in a street in San Juan, as he was leaving a regularly scheduled meeting of a prominent anti-communist group.

Cuba did not appear in the Florida action. In 2008, after holding a bench trial on the merits, the Florida court entered a default judgment in Vera's favor for approximately $95 million. Although foreign states are generally immune from the jurisdiction of the courts of the United States under the FSIA, the Florida court held that Cuba was subject to suit under a statutory exception to immunity then found in 28 U.S.C. § 1605(a)(7).¹ That exception, often referred to as the "terrorism exception," explicitly authorizes suits against foreign states that sponsor certain acts of terrorism, such as extrajudicial killings and torture. See 28 U.S.C. § 1605A(a)(1). To invoke the exception, the foreign state must have been "designated as a state sponsor of terrorism at the time the act ... occurred" or later, "as a result of such act." Id . § 1605A(a)(2)(A)(i)(I).

The Florida court held that the FSIA's terrorism exception applied to Vera's suit. Specifically, it found that Cuba ordered the extrajudicial killing of Vera's father in 1976 in retaliation for his participation in the anti-communist movement and that Cuba "was designated to be a state sponsor of terrorism in 1982 ... and remains so designated." J.A. 273. In the Florida court's view, those facts rendered Cuba subject to suit in any court in the United States and established Vera's right to relief.

Armed with the state court judgment, Vera filed a complaint against Cuba in the United States District Court for the Southern District of New York, seeking "recognition and entry" of the Florida judgment pursuant to the Full Faith and Credit Act, 28 U.S.C. § 1738. J.A. 282. Vera alleged that he was entitled to a federal judgment against Cuba based on the strength of the Florida judgment, which, according to Vera, rested on all of the necessary findings of fact. In particular, Vera alleged the Florida court found that agents of Cuba shot and killed his father in San Juan and that Cuba "was designated a ‘State Sponsor of Terrorism’ ... and remains so designated." J.A. 283.

Cuba failed to appear in the federal action. On August 17, 2012, the District Court entered a default judgment against it for approximately $45 million, including interest.² The District Court stated it had subject matter jurisdiction over Vera's claim "pursuant to 28 U.S.C. §[§] 1331 and 1602 et seq .," and that the Florida judgment was entitled to full faith and credit. J.A. 286.

With a federal default judgment in hand, Vera sought to collect Cuban assets wherever held. He commenced an execution and attachment proceeding in the District Court and served information subpoenas on the New York branches of various foreign banks, seeking information regarding Cuba's assets both inside and outside the United States. See Fed. R. Civ. P. 69(a)(2) ; N.Y. C.P.L.R. 5224(a). BBVA, one of the garnishee banks, supplied information pertaining to Cuban assets located at its New York branch, but refused to produce information regarding Cuban assets found outside New York.

Vera moved to compel BBVA's compliance with the request for information, and BBVA cross-moved to quash the subpoena. According to BBVA, the subpoena was void ab initio because the District Court lacked subject matter jurisdiction over the action in which it was served. The District Court lacked jurisdiction over Vera's action against Cuba, BBVA argued, because the terrorism exception to sovereign immunity in the FSIA—the only possible basis for subject matter jurisdiction over Cuba—did not apply. BBVA also argued that the District Court lacked personal jurisdiction over it and therefore could not compel BBVA to produce information regarding Cuban assets located outside the United States.

While Vera's motion to compel and BBVA's cross-motion to quash were pending, U.S. Marshals levied writs of execution against Cuban assets held at the New York branches of various banks.³ Vera filed an omnibus petition for a turnover of the assets, naming BBVA and other foreign banks as third-party defendants in that proceeding.⁴ See 28 U.S.C. § 1610(g)(1) ("[T]he property of a foreign state against which a judgment is entered under [ § 1605A or § 1605(a)(7) ] ... is subject to attachment in aid of execution, and execution, upon that judgment as provided in this section...."); N.Y. C.P.L.R. 5225(b) (authorizing judgment creditor to commence special proceeding against garnishee who holds assets of judgment debtor).

BBVA answered and moved to dismiss the special proceeding for lack of subject matter jurisdiction under the FSIA. The District Court construed BBVA's argument as a collateral attack on the Florida judgment and denied the motion, reasoning, as relevant here, that the Florida court held a trial on the merits and "made appropriate jurisdictional findings," including finding that "Cuba was designated as a state sponsor of terrorism either before [Vera's father's killing] or partially as a result of th[at] act." Vera v. Republic of Cuba , 40 F.Supp.3d 367, 376 (S.D.N.Y. 2014). This finding, the court concluded, "satisfied the criteria of 28 U.S.C. § 1605(a)(7) (now § 1605A ), and established that the Florida [court] ... had jurisdiction over Cuba." Id.

Shortly thereafter, the District Court denied BBVA's motion to quash and granted Vera's motion to compel BBVA's compliance with the information subpoena, ordering the bank to "provide full and complete answers with respect to the Republic of Cuba's assets located in [BBVA's] branches outside of, as well as inside, the United States."Vera v. Banco Bilbao Vizcaya Argentaria (S.A.) , No. 12 Civ. 1596, 2014 U.S. Dist. LEXIS 187222, at *6 (S.D.N.Y. Sept. 10, 2014). The District Court rejected BBVA's argument concerning subject matter jurisdiction for the same reason it previously denied BBVA's motion to dismiss the turnover proceeding—namely, that the Florida court already made the appropriate findings to support the exercise of jurisdiction over Cuba. See id. at *7; see also Vera , 40 F.Supp.3d at 376. The District Court also concluded it had personal jurisdiction over the foreign bank. Id. at *8–9.

The District Court subsequently denied BBVA's motion for reconsideration and...