Strauss v. Crdit Lyonnais, S.A.

Citation: 379 F. Supp. 3d 148Docket: 06-cv-702 (DLI) (RML); 07-cv-914 (DLI) (RML)

Court: District Court, E.D. New York; March 31, 2019; Federal District Court

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Approximately 200 Plaintiffs, including individuals and estates of deceased persons, initiated a consolidated lawsuit against Crédit Lyonnais, S.A., seeking damages for fifteen terrorist attacks in Israel and Palestine under the civil liability provisions of the Antiterrorism Act of 1992 (ATA), specifically 18 U.S.C. § 2333(a). The Plaintiffs allege that the Defendant is civilly liable for: 1) aiding and abetting murder and serious physical injury of American nationals abroad (18 U.S.C. § 2332); 2) knowingly providing material support to a Foreign Terrorist Organization (FTO) (18 U.S.C. § 2339B); and 3) unlawfully transmitting funds for terrorist purposes (18 U.S.C. § 2339C). The Defendant filed a renewed motion for summary judgment, which was granted by the court.

The litigation history includes the filing of a complaint in February 2006 (Strauss v. Crédit Lyonnais, S.A.), where initial claims were partially dismissed due to being time-barred but allowed for amendment. Subsequent actions included an amended complaint and another case (Wolf v. Crédit Lyonnais, S.A.), leading to further dismissals of claims based on time limitations. In February 2013, a prior motion for summary judgment was partially granted, permitting some claims to continue while dismissing others. In June 2014, the Defendant sought dismissal for lack of personal jurisdiction or summary judgment, which was denied in March 2016. Following this, the Defendant requested reconsideration of specific evidentiary rulings related to the case.

The Court partially granted the Defendant's motion, establishing that Plaintiffs are collaterally estopped from claiming Hamas was responsible for the January 29, 2004 Attack. However, the Court denied the remainder of the motion for partial reconsideration. Following a 2013 amendment to the Anti-Terrorism Act (ATA), the Court reinstated Plaintiffs' claims related to five previously dismissed attacks. On September 26, 2016, the Defendant sought summary judgment regarding these Reinstated Attacks, which the Court denied in part. Key rulings included permitting the testimony of Plaintiffs' experts Ronni Shaked and Eli Alshech, allowing the admissibility of Israeli military court conviction records and certain ISA Reports, and confirming there was sufficient evidence for a jury to find Hamas responsible for the Reinstated Attacks. Conversely, the Court excluded testimony from Plaintiffs' fact witnesses, hearsay documents, and dismissed Plaintiffs' § 2339C claims. On March 14, 2018, the Court allowed the Defendant to file a second summary judgment motion based on the Second Circuit's decision in Linde v. Arab Bank, PLC. The Defendant submitted this motion on May 23, 2018, to which the Plaintiffs opposed, and the Defendant replied. The legal standard for summary judgment requires no genuine dispute on material facts, with the Court viewing evidence in favor of the nonmoving party unless contradicted by the record. A genuine issue exists if reasonable evidence could lead a jury to rule for the nonmoving party, but mere speculation or conclusory allegations are insufficient to oppose a summary judgment motion.

Section 2333(a) of the ATA provides a civil remedy for U.S. nationals injured by international terrorism, allowing them or their estates to sue in U.S. district courts. "International terrorism" is defined by four criteria: 1) it involves violent acts or acts dangerous to human life; 2) it violates U.S. federal or state criminal laws; 3) it appears intended to intimidate civilians, influence government policy, or affect government conduct through specific means; and 4) it occurs primarily outside the U.S. or transcends national boundaries. Plaintiffs cite 18 U.S.C. § 2339B as the requisite criminal violation, which criminalizes providing material support to foreign terrorist organizations (FTOs). Liability under § 2333(a) can arise even if support is not directly given to an FTO. The Second Circuit clarified that while providing material support can contribute to an act of international terrorism, it does not automatically constitute such an act. In the case of Linde, the court ruled that a jury must find all definitional requirements of international terrorism met, including those related to violence and intent, rather than assuming that material support alone suffices to prove an act of international terrorism.

In Boim v. Holy Land Foundation for Relief and Development, the Seventh Circuit ruled that financial donations to Hamas, with knowledge of their use for killing Israeli Jews, did not constitute international terrorism as a matter of law. The court compared donating money to Hamas to giving a loaded gun to a child, suggesting both actions are dangerous but not violent acts per se. The Seventh Circuit emphasized the foreseeability that such funding enables violence. Conversely, the Second Circuit in Linde clarified that it was not compelled to decide if direct monetary donations to known terrorist organizations meet the definition of international terrorism under § 2331(1). It determined that routine financial services to terrorist affiliates do not equate to providing a loaded gun, thereby concluding that material support alone does not suffice for international terrorism.

Initially, the Anti-Terrorism Act (ATA) allowed civil remedies only against those directly perpetrating acts of terrorism. However, the Justice Against Terrorism Act (JASTA), enacted on September 28, 2016, amended the ATA to enable civil actions against individuals who aid, abet, or conspire with terrorists. These claims can be made regardless of when the terrorist act occurred, as long as they arise from injuries after September 11, 2001. JASTA's provisions apply to ongoing or newly commenced civil actions post-enactment.

Congress established that the framework for aiding and abetting liability under the Anti-Terrorism Act (ATA) aligns with the Halberstam v. Welch decision, which outlines three elements: (1) the principal must commit a wrongful act causing injury; (2) the defendant must be aware of their role in the illegal activity when providing assistance; and (3) the defendant must knowingly and substantially assist the principal violation. Six factors determine the substantiality of assistance: (1) the nature of the encouraged act; (2) the amount of assistance provided; (3) the defendant's presence during the act; (4) the relationship to the principal; (5) the defendant's state of mind; and (6) the duration of assistance. Furthermore, financial institutions must show they were aware that their services contributed to terrorist activities, which transcends mere material support.

In the current case, Plaintiffs argue that a material fact remains regarding whether the Defendant committed international terrorism by facilitating fund transfers to charities linked to Hamas. The ATA identifies four criteria for an act to qualify as international terrorism: (1) it must involve violence or endanger lives; (2) it must violate federal or state law if conducted in the U.S.; (3) it should intend to intimidate or coerce a civilian population or influence government policy; and (4) it must occur primarily outside the U.S. or transcend national boundaries. The Court has not previously assessed whether the Defendant's actions satisfy all these criteria.

Defendant seeks summary judgment, claiming Plaintiffs cannot prove all four requirements, particularly denying any violent acts or intent to terrorize. While the Defendant concedes a material fact issue exists regarding knowingly providing support to a Foreign Terrorist Organization (FTO), it does not dispute that its conduct occurred primarily outside the U.S. or transcended national boundaries.

Defendant argues that no reasonable juror could conclude that its banking services to CBSP involved violent acts or actions dangerous to human life. It claims that evidence shows CBSP operates as a charity focused on aiding a deprived region, supported by its bylaws and the nature of its financial transfers, which were exclusively earmarked for charitable purposes. Testimony from Defendant's employee, Robert Audren, indicates that CBSP’s activities aligned with its stated charitable objectives, benefitting "charitable Muslim associations."

Plaintiffs concede there is no evidence linking any of CBSP's fund transfers to specific violent or terrorist activities and admit they do not claim that funds transferred to Hamas financed any terrorist attacks affecting them. While Plaintiffs' experts acknowledge that the 13 Charities engaged in charitable work, they assert the Charities were controlled by Hamas founders and played roles in supporting terrorist activities. However, these claims lack evidentiary backing. Defendants counter these assertions using the admissions from Plaintiffs' experts, who do not provide evidence that funds from CBSP were utilized to carry out the alleged attacks or that the Charities were involved in planning or executing those attacks.

Defendant argues that the evidence presented by Plaintiffs does not pertain to the wire transfers executed by Defendant. The Court previously determined that Plaintiffs' claims withstand summary judgment regarding whether Defendant possessed the necessary scienter under the material support statute § 2339B. When considering the evidence favorably for Plaintiffs, there remains a genuine dispute over whether Defendant knowingly provided material support to a terrorist organization. The Second Circuit clarified that § 2339 requires only that Defendant had knowledge or exhibited deliberate indifference to a banking client's potential provision of material support to a terrorist group, regardless of whether that support directly facilitated terrorist activities.

However, for an act to constitute international terrorism under § 2331(1), it must meet specific definitional criteria. The Second Circuit's interpretation indicates that a violation of § 2339B does not automatically imply an act of international terrorism. While actions violating the material support statute can sometimes align with the definition of international terrorism, a reasonable jury cannot conclude that Defendant's alleged actions involved violence or posed a threat to human life. Plaintiffs claim that whether Defendant's actions meet the criteria for § 2331(1) and § 2333(d) should be determined by a jury, but this assertion is not supported by the Second Circuit's ruling in Linde. In Linde, the court found that providing routine financial services to individuals associated with terrorist organizations did not inherently constitute violent or life-threatening acts.

The Linde case was remanded for a jury to assess whether the § 2331(1) requirements were met, without conclusively ruling that the defendant did not meet those requirements as a matter of law. Unlike Linde, where evidence indicated that Arab Bank knowingly processed transfers for individuals connected to Hamas and facilitated payments for violent acts, no such evidence exists regarding Defendant's transactions with the 13 Charities. The Court, lacking specific guidance from the Second Circuit on what constitutes violent acts or actions dangerous to human life, will refer to the statute's plain language.

Black's Law Dictionary defines 'violent' in three ways: 1) characterized by strong physical force; 2) resulting from extreme force; and 3) vehemently threatening. 'Dangerous' is defined as: 1) perilous or unsafe; and 2) likely to cause serious bodily harm. Plaintiffs have enough evidence to show a triable issue regarding whether Defendant provided material support to a foreign terrorist organization under § 2339B. However, the evidence does not support a trial concerning whether Defendant's actions involved violent acts or acts dangerous to human life as per § 2331(1). The mere fact that the 13 Charities were controlled by Hamas founders does not suffice to prove such involvement. Plaintiffs fail to present evidence that these Charities engaged in or contributed to violent acts or that any banking services offered by Defendant were linked to terrorist activities. Plaintiffs claim that Defendant's banking services indirectly supported terrorism, but this does not establish a direct connection between those services and any violent acts or dangerous conditions. Consequently, Defendant's request for summary judgment on the violent acts and dangerous acts prong of § 2331(1) is granted due to insufficient evidence from Plaintiffs.

For the terroristic intent prong of § 2331(1), actions must appear to intend to intimidate or coerce civilians, influence government policy, or affect government conduct through mass destruction, assassination, or kidnapping. The standard for "appear to be intended" is objective, not reliant on the actor's beliefs. Providing material support to a terrorist organization under § 2339B does not automatically equate to an act of international terrorism; financial services to a known terrorist organization may still constitute material support even if they do not exhibit the required apparent intent under § 2331(1)(B).

Plaintiffs have failed to demonstrate that Defendant's actions meet the specific intent requirement under § 2331(B). Although Plaintiffs present evidence suggesting Defendant provided material support to a terrorist organization, they do not prove that Defendant possessed the necessary terroristic intent as defined by § 2331. The evidence indicates that Defendant knowingly provided financial services to a designated Foreign Terrorist Organization (FTO), fulfilling the scienter requirement under § 2339. The court previously found a genuine issue of material fact regarding Defendant's knowledge of CBSP's support for Hamas, which led to a denial of Defendant's motion for summary judgment concerning material support to a terrorist organization. However, the Second Circuit clarified that the scienter requirement does not equate to the definitional aspects of terroristic intent in § 2331(1). The court referenced the Linde case, where actions like suicide bombing constituted material support and fulfilled the intent requirement for terrorism. In contrast, here, Defendant's provision of banking services for charitable purposes does not demonstrate an intent to intimidate or coerce, nor does it influence governmental policy through violence. Therefore, the court grants Defendant's summary judgment motion regarding the terroristic intent prong of § 2331(1), as no material issues of fact exist concerning the intent to intimidate or coerce a civilian population or affect government conduct through violence.

Plaintiffs argue for the inclusion of an aiding and abetting claim under § 2333(d) in the proposed joint pretrial order, despite a prior dismissal of similar claims by Judge Sifton in 2006. They assert that the inclusion of this statutory claim is valid, citing the retroactivity of JASTA and referencing the Halberstam framework. Plaintiffs allege that Defendant provided substantial assistance to Hamas, which was responsible for attacks that injured them, thereby claiming that Defendant's actions directly contributed to their injuries. 

Defendant counters that the aiding and abetting claim has been dismissed previously and that Plaintiffs have not sought to replead it. Furthermore, Defendant argues that even if allowed to proceed, they would be entitled to summary judgment on the claim. While acknowledging the dismissal of their common law claim, Plaintiffs maintain that the pretrial order, governed by Rule 16(d), should control the proceedings and can supersede earlier pleadings. 

The Court faces the decision of whether to allow the aiding and abetting claim in the pretrial order, noting that it typically does not expect new claims in this context, especially in a long-standing case with extensive motion practice. The Court emphasizes the purpose of avoiding surprise in legal proceedings and indicates that Plaintiffs may need to seek leave to amend their complaint under Federal Rule of Civil Procedure 15(a) instead of introducing new claims through the pretrial order.

Plaintiffs request relief as an alternative in their opposition, suggesting they may amend their complaints to assert claims under the Justice Against Sponsors of Terrorism Act (JASTA) if the Court prefers. Federal Rule of Civil Procedure 15(a) allows amendments to be granted liberally, but courts may deny them for reasons such as futility, bad faith, undue delay, or prejudice. A scheduling order set a deadline of June 17, 2016, for amendments, which Plaintiffs met by filing their amended complaints. However, they could not include JASTA claims, as the law was enacted after this deadline. The diligence of the moving party is crucial in establishing good cause for amendments. The retroactive nature of JASTA's enactment after the scheduling deadline is argued to constitute good cause. The Defendant claims these JASTA claims should not be permitted because they were previously addressed in a prior case (Strauss I). In that case, Judge Sifton dismissed common law aiding and abetting claims but could not assess statutory claims under JASTA since it did not exist at that time. The Defendant argues that Judge Sifton's dismissal of the common law claims was based on the same legal principles applicable to JASTA claims, particularly referencing the precedent set in "In re Terrorist Attacks on Sept. 11." However, it remains unclear whether Judge Sifton applied the Halberstam factors in his evaluation.

The Second Circuit in Linde established that the Halberstam framework for civil aiding and abetting liability is applicable to JASTA (Justice Against Sponsors of Terrorism Act) claims. The court indicated uncertainty regarding whether Judge Sifton applied this framework, thus allowing Plaintiffs to amend their complaint. However, the court ultimately denied the amendment as futile. 

Defendant argued that even with a potential amendment, they would be entitled to summary judgment on the aiding and abetting claim under JASTA. A proposed amendment is considered futile if it cannot survive a motion to dismiss under Rule 12(b)(6). The court noted that when an amendment is proposed in response to a summary judgment motion, it may be denied if it creates no triable issue of fact, regardless of whether the amended complaint states a valid claim.

In this case, Plaintiffs' proposed JASTA claim was deemed legally insufficient as it failed to demonstrate that Defendant had the necessary scienter to support an aiding and abetting claim. Plaintiffs' evidence did not establish that Defendant was aware of its involvement in any violent activities related to Hamas or CBSP (the designated terrorist organization). Merely providing banking services to a terrorist organization was insufficient to meet JASTA's scienter requirement.

Consequently, the court granted Defendant's summary judgment motion regarding Plaintiffs' claims under the ATA (Anti-Terrorism Act) and denied Plaintiffs' motion to amend the complaint to include a JASTA claim with prejudice. The court referenced previous factual summaries in earlier orders relevant to this action.