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Kaplan v. Central Bank of Islamic Republic of Iran

United States Court of Appeals, District of Columbia Circuit

July 20, 2018

Chaim Kaplan, individually and as natural guardian of plaintiffs M.K. (1), A.L.K., M.K. (2), C.K. and E.K., et al., Appellants
v.
Central Bank of the Islamic Republic of Iran, also known as Bank Markazi Jomhouri Islami Iran, et al., Appellees Chaim Kaplan, et al., Appellants
v.
Hezbollah, also known as Hizbullah, also known as Hizbollah, also known as Hezballah, also known as Hizballah and Democratic People's Republic of Korea, also known as North Korea, Appellees

          Argued September 12, 2017

          Appeal from the United States District Court for the District of Columbia (Nos. 1:10-cv-00483, 1:09-cv-00646)

          Meir Katz argued the cause for appellants. With him on the briefs was Robert J. Tolchin.

          Jeremy D. Frey argued the cause for appellees. With him on the brief was Matthew D. Foster.

          Anthony F. Shelley, appointed by the court, argued the cause as amicus curiae in support of the portions of the District Court's judgment at issue on appeal. With him on the brief were Ian A. Herbert and Adam W. Braskich.

          Before: Kavanaugh [*] and Srinivasan, Circuit Judges, and Edwards, Senior Circuit Judge.

          OPINION

          SRINIVASAN, CIRCUIT JUDGE

         These cases arise from a barrage of rocket attacks launched by Hezbollah into northern Israel in the summer of 2006. Plaintiffs are a group of American, Israeli, and Canadian citizens who sued Hezbollah and two foreign banks for injuries sustained during the attacks. In one action, the American plaintiffs allege that Hezbollah's rocket attacks amounted to acts of international terrorism, in violation of the Anti-Terrorism Act (ATA). In a second action, all of the plaintiffs accuse the banks of funding Hezbollah's attacks, in violation of both the ATA and the Alien Tort Statute (ATS).

         The district court dismissed both complaints. The court concluded that the ATA's so-called act-of-war exception precluded the claims under that statute, and that the presumption against extraterritoriality barred the ATS claims.

         We vacate the district court's dismissal with respect to the ATA claims and remand for further proceedings. We conclude that the district court must first determine that it has personal jurisdiction over the defendants before applying the statute's act-of-war exception. We affirm the district court's dismissal of the claims under the ATS based on the Supreme Court's recent decision in Jesner v. Arab Bank, PLC, 138 S.Ct. 1386 (2018), which holds that foreign corporations (like the bank defendants here) are not subject to liability under that statute.

         I.

         The complaints in these cases contain the following allegations, which we assume are true given that the claims before us on appeal were dismissed based on the alleged facts. See English v. District of Columbia, 717 F.3d 968, 971 (D.C. Cir. 2013).

         On July 12, 2006, Hezbollah militants left Lebanon, crossed the Israeli border, and kidnapped and killed several Israeli soldiers. Israel responded by mounting a ground offensive in Lebanon and deploying a bombing campaign against Hezbollah. Hezbollah then initiated a campaign of rocket attacks, firing thousands of unguided rockets into civilian populations in northern Israel, striking cities, towns, and villages. The conflict ended on August 14, 2006, when the United Nations brokered a cease-fire between Hezbollah, Israel, and Lebanon. Over the course of the 34-day conflict, numerous persons lost their lives, including more than 1, 000 Lebanese civilians, between 250 and 500 members of Hezbollah, 119 Israeli soldiers, and 43 Israeli civilians.

         In 2009 and 2010, plaintiffs filed two separate actions to recover for their injuries from Hezbollah's rocket attacks. In the first action, a group of American plaintiffs brought Anti-Terrorism Act claims against Hezbollah, Foreign Sovereign Immunities Act claims against North Korea for funding the rocket attacks, and common law tort claims against both defendants. In the second action, the same American plaintiffs brought ATA claims against Bank Saderat PLC for transferring funds from Iran to Hezbollah, and Foreign Sovereign Immunities Act claims against Iran, the Central Bank of Iran, and Bank Saderat Iran for supporting the rocket attacks. The second action also included claims by a group of non-American plaintiffs against Bank Saderat Iran and Bank Saderat PLC under the Alien Tort Statute. In addition, all plaintiffs in the second action raised claims under Israeli tort law against Bank Saderat Iran and Bank Saderat PLC.

         The district court largely addressed the two cases together. Because Hezbollah and North Korea failed to appear after being served, the plaintiffs moved for a default judgment against those defendants. Bank Saderat Iran and Bank Saderat PLC both appeared and moved to dismiss the claims against them for lack of subject-matter jurisdiction or personal jurisdiction, and for failure to state a claim.

         On August 20, 2013, the district court dismissed the Anti-Terrorism Act claims (which had been brought against Hezbollah and Bank Saderat PLC), holding that the ATA's act-of-war exception precluded liability. The court also dismissed the Alien Tort Statute claims (which had been brought against Bank Saderat PLC and Bank Saderat Iran), based on the presumption against extraterritoriality. Kaplan v. Cent. Bank of Islamic Republic of Iran, 961 F.Supp.2d 185, 204-05 (D.D.C. 2013). And the court dismissed the Foreign Sovereign Immunities Act claims against Bank Saderat Iran, because the bank was not the "agency or instrumentality of a foreign state." Id. at 198-99.

         On July 24, 2014, the district court issued an opinion concluding that Iran and North Korea, but not the Central Bank of Iran, had materially supported Hezbollah's attacks in violation of the Foreign Sovereign Immunities Act. On September 30, 2016, after further proceedings on the claims against Iran and North Korea, the district court entered a default judgment against those defendants, awarding the plaintiffs more than $169 million in compensatory and punitive damages.

         The plaintiffs now appeal the dismissal of their Anti-Terrorism Act claims against Hezbollah and Bank Saderat PLC, as well as the dismissal of their Alien Tort Statute claims against Bank Saderat PLC and Bank Saderat Iran. Because Hezbollah had not entered an appearance, we appointed an amicus curiae to present arguments supporting the portions of the district court's judgment at issue on appeal.

         II.

         We initially consider two challenges to our appellate jurisdiction. Under 28 U.S.C. § 1291, we may review "final decisions" of the district courts in civil cases if an appeal is taken within thirty days of entry of the judgment or order being challenged. See Fed. R. App. P. 4(a)(1)(A). Bank Saderat PLC and Bank Saderat Iran (the Banks) argue that plaintiffs' appeal is untimely because the district court entered its order dismissing the claims against the Banks on August 20, 2013, more than three years before the plaintiffs (on November 27, 2016) filed their notice of appeal concerning those claims. Amicus, for its part, argues that plaintiffs' appeal of the dismissal of the claims against Hezbollah is premature because the district court's September 30, 2016, order was not a "final" decision within the meaning of Section 1291. We disagree on both counts.

         A.

         We first address the timeliness of the plaintiffs' appeal of the August 2013 dismissal of their claims against the Banks. Federal Rule of Civil Procedure 54(b) governs the entry of final judgment in a case involving multiple claims and parties. In order to enter "a final judgment as to one or more, but fewer than all, claims or parties," a district court must "expressly determine[] that there is no just reason for delay." Fed.R.Civ.P. 54(b). Otherwise, any decision "that adjudicates . . . the rights and liabilities of fewer than all the parties" is not a final, appealable judgment. Id.

         Relatedly, our court has determined that unserved defendants "are not 'parties' within the meaning of Rule 54(b)." Cambridge Holdings Grp., Inc. v. Fed. Ins. Co., 489 F.3d 1356, 1360 (D.C. Cir. 2007). Therefore, "a district court order disposing of all claims against all properly served defendants" generally constitutes a final judgment "even if claims against those not properly served remain unresolved." Id. at 1360-61.

         Relying on that aspect of our decision in Cambridge, the Banks contend that the plaintiffs' appeal is untimely. The Banks observe that, at the time of the district court's August 2013 dismissal of the claims against them, the remaining defendants in the case involving the Banks-Iran and Central Bank of Iran (CBI)-had not yet been properly served. Thus, in the Banks' view, Iran and CBI were not "parties" for purposes of Rule 54(b), meaning that the August 2013 order constituted a final judgment "disposing of all claims against all properly served defendants." Cambridge, 489 F.3d at 1361. That order, the Banks submit, thus needed to be appealed within 30 days. See Fed. R. App. P. 4(a)(1)(A).

         The Banks are correct that, under Cambridge, the existence of unresolved claims against unserved defendants generally will not preclude treatment of an order disposing of all other claims as a final, appealable judgment. But Cambridge also recognized the possibility of a different result when the district court affirmatively contemplates further proceedings on the claims against the unserved defendants. We observed that, in the Ninth Circuit, "an order disposing of all claims only against served parties is not final if 'it is clear from the course of proceedings that further adjudication is contemplated' by the district court." Cambridge, 489 F.3d at 1360 n.2 (quoting Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 872 (9th Cir. 2004)).

         Although we had no occasion in Cambridge to consider whether to adopt the same approach, we do so today. We conclude that, when a district court makes plain that it foresees further proceedings on unresolved claims against defendants who have yet to be properly served, a decision resolving all the claims against the properly served defendants is not a final, appealable judgment. In that situation, any appeal should await resolution of the contemplated further proceedings on the claims against the as-yet-unserved defendants.

         That approach vindicates Rule 54(b)'s central purpose of avoiding the "piecemeal disposition of litigation." Cambridge, 489 F.3d at 1361. It also ensures that Rule 54(b) continues to enable district courts to lend "welcome certainty to the appellate procedure." Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 435 (1956). That is because, if a district court wishes to allow the immediate appeal of its disposition of claims against the properly served defendants even though it affirmatively contemplates further proceedings on the remaining claims, it can do so by expressly determining "that there is no just reason for delay." Fed.R.Civ.P. 54(b).

         Consider the anomalous implications of a contrary approach, under which the resolution of claims against properly served defendants would be considered a final judgment even though the district court intends further proceedings against as-yet-unserved defendants. In such a regime, the district court would be unable to dispose of the claims against properly served defendants without entering a final judgment, even if it fully expects other defendants to be imminently served. The court might then opt to delay announcing its resolution of the claims against the already served defendants so as to avoid fracturing the case, contravening the Rules' general preference for the swift resolution of claims. See Fed. R. Civ. P. 1. The better course is to recognize that, when a district court plainly contemplates further proceedings on remaining claims against as-yet-unserved defendants, the resolution of the claims against properly served defendants is not a final, appealable judgment (absent an express and reasonable determination of "no just reason for delay" under Rule 54(b)). See Bldg. Indus. Ass'n of Superior California v. Babbitt, 161 F.3d 740, 741 (D.C. Cir. 1998).

         Applying that approach here, it is clear that, when the district court dismissed the claims against the Banks in August 2013, it contemplated further proceedings on the claims against the unserved defendants, Iran and CBI. In its memorandum opinion dismissing the claims against the Banks, the court repeatedly referred to Iran and CBI as "the remaining defendants," and the FSIA claims against them as the "remaining claims." Kaplan, 961 F.Supp.2d at 206. The court also discussed the failed previous attempts at service and ordered the plaintiffs to serve Iran and CBI through diplomatic channels within twenty-one days. Id. Indeed, in its order accompanying the opinion, the court dismissed the claims against the Banks in two lines and then devoted a full page to describing how the plaintiffs should "commence service of process via diplomatic channels" for their "remaining claims." Order, Kaplan v. Cent. Bank of Islamic Republic of Iran, No. 10-cv-483 (D.D.C. Aug. 20, 2013), ECF No. 41. In short, both the opinion and order make clear the district court's expectation that the remaining defendants could be properly served and the claims against them would then proceed to resolution (which in fact happened).

         In those circumstances, we hold that the district court's August 20, 2013, order, dismissing the claims against the Banks, was not a final, appealable judgment. Rather, the court's October 28, 2016, order denying plaintiffs' motion for reconsideration (and for alteration or amendment of the judgment) was the operative appealable judgment. See Fed. R. App. P. 4(a)(4)(A)(iv). Plaintiffs timely filed their notice of appeal within 30 days of that judgment.

         B.

         Whereas the Banks contend that the appeal of the dismissal of the claims against them was too late, Amicus suggests that the appeal of the dismissal of the claims against Hezbollah may have been too early. The district court initially dismissed the ATA claims against Hezbollah on August 20, 2013. And on August 20, 2015, plaintiffs voluntarily dismissed the tort claims against Hezbollah. After further proceedings on claims involving other defendants, the district court, on September 30, 2016, entered an "Order and Judgment" that it characterized as a "final judgment." Order & Judgment, Kaplan v. Hezbollah, No. 09-cv-646 (D.D.C. Sept. 30, 2016), ECF No. 84. One week later, on October 7, the plaintiffs filed a notice of appeal concerning the dismissal of the claims against Hezbollah.

         As we have seen, an order resolving fewer than all claims against all defendants generally is not a final, appealable order. See Fed. R. Civ. P. 54(b). Amicus argues that we may lack jurisdiction over the appeal concerning the claims against Hezbollah insofar as the district court's September 30, 2016, order left unresolved certain of the claims in the case involving Hezbollah. In particular, although the plaintiffs' complaint in that case alleged both Foreign Sovereign Immunities Act (FSIA) claims and tort claims against North Korea, the district court expressly referenced only the FSIA claims in its opinion ...


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