Bennett v. Islamic Republic of Iran
927 F. Supp. 2d 833
N.D. Cal.2013Background
- Four groups of judgment creditors hold judgments against Iran seeking to reach Blocked Assets held by Visa and Franklin.
- Blocked Assets are funds owed to Bank Melli but blocked by OFAC and executive orders.
- Visa/Franklin interplead to determine priority among creditor groups for satisfaction of judgments.
- Bank Melli, Iran’s largest bank, asserts separation from Iran, arguing Bancec and related law apply to shield liability.
- TRIA and FSIA §1610(g) authorize attachment of an instrumentality’s assets to satisfy judgments against a terrorist state.
- The court previously noted assets are in the court registry and Visa/Franklin admit no ownership interest; Bank Melli moves to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bancec bars liability of Bank Melli. | Bank Melli is an instrumentality; entities are distinct. | Bancec should shield Bank Melli from Iran’s debts. | TRIA and §1610(g) override Bancec for terrorism judgments. |
| Whether TRIA and §1610(g) apply retroactively. | Retroactive enforcement allowed by statutes. | Applying retroactively would increase liability for past conduct. | Statutes apply; retroactivity rejected as to liability; collectability addressed. |
| Whether assets must be property of Bank Melli to be attachable. | Blocked Assets are assets of Bank Melli because owed to it. | Assets must be Bank Melli’s property. | Blocked Assets are assets of Bank Melli; attachment permissible. |
| Whether Bank Melli is a required party under Rule 19. | Bank Melli not required due to instrumentality liability framework. | Bank Melli asserts immunity and joinder is required. | Bank Melli not a required party; action may proceed without joinder. |
Key Cases Cited
- Weinstein v. Islamic Rep. of Iran, 609 F.3d 43 (2d Cir. 2010) (TRIA overrides presumption of separateness for terrorism-related judgments)
- Johnson v. United States, 529 U.S. 694 (U.S. 2000) (ex post facto-like retroactivity concerns in sentencing)
- Vartelas v. Holder, 132 S. Ct. 1479 (U.S. 2012) (IIRIRA retroactivity; not punitive to innocent acts)
- Tyson v. Holder, 670 F.3d 1015 (9th Cir. 2012) (retroactivity of immigration-relief provisions; settled expectations)
- Pimentel, 553 U.S. 851 (U.S. 2008) (Rule 19 and necessity of sovereigns in interpleader contexts)
- Peterson v. Islamic Rep. of Iran, 627 F.3d 1117 (9th Cir. 2010) (service of post-judgment motions not required against instrumentalities)