Estate of Heiser v. Islamic Republic of Iran
885 F. Supp. 2d 429
D.D.C.2012Background
- Khobar Towers bombing in Dhahran (June 25, 1996) killed 19 U.S. personnel and injured many; Hezbollah implicated.
- Plaintiffs (victims and estates) sued Iran, MOIS, and IRGC under FSIA’s state-sponsored terrorism exception, §1605(a)(7).
- Court previously held Iran’s senior leadership sponsored the attack; IRGC and MOIS involved (Heiser I).
- NDAA 2008 added §1605A and §1610(g); TRIA §201(a) allowed execution on blocked assets; punitive damages added later (Heiser II).
- Plaintiffs sought turnover of funds from blocked accounts at Wells Fargo and Bank of America under TRIA and FSIA §1610(g).
- Banks contested turnover for eleven Contested Accounts (plus eight Uncontested Accounts) and sought interpleader for Uncontested Accounts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does TRIA §201(a) require ownership in blocked assets? | Plaintiffs contend assets blocked under OFAC valid for execution if owned by Iran. | Banks argue 'of' requires ownership by Iran; OFAC's broad blocking does not control ownership for TRIA. | TRIA §201(a) requires ownership by Iran; Contested Accounts not owned by Iran, no turnover. |
| Does FSIA §1610(g) require Iranian ownership in Contested Accounts? | Plaintiffs rely on §1610(g) ownership language to attach Iran’s property. | Banks contend no Iranian ownership in Contested Accounts; ownership present only in Uncontested Accounts. | Ownership requirement applies; Contested Accounts lack Iranian ownership. |
| Is field preemption applicable to preempt DC law on ownership in this context? | Federal TRIA/FSIA/OFAC should preempt DC ownership rules | State law should control absent preemption, and OFAC does not define ownership for TRIA/FSIA. | Field preemption applies; federal statutes preempt DC ownership standards. |
| What law governs ownership analysis for these assets? | Federal common law should govern ownership due to preemption. | State law (U.C.C. Article 4A) can define ownership in EFT context. | Federal common law applies; Iran has no ownership in Contested Accounts under Restatement/U.C.C. framework. |
| Should the Banks file interpleader for Uncontested Accounts? | Not necessary to determine ownership; interpleader unnecessary for uncontested funds. | Interpleader appropriate to resolve competing claims. | Interpleader granted to address potential third-party interests in Uncontested Accounts. |
Key Cases Cited
- Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 131 S. Ct. 2188 (2011) (ownership denoted by the word 'of' in statutes)
- First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (1983) (instrumentality distinct from sovereign; ownership considerations)
- Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58 (2d Cir. 2009) (midstream EFTs and ownership/passage of title in transfers)
- Asia Pulp & Paper Co. v. United States, 609 F.3d 111 (2d Cir. 2010) (EFT ownership and attachment under Article 4A framework)
- United States v. Rodgers, 461 U.S. 677 (1983) (property interests and attachment doctrines in judgments)
- Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 130 S. Ct. 2433 (2010) (principles of statutory interpretation; giving effect to every word)
- American Insurance Ass’n v. Garamendi, 539 U.S. 396 (2003) (foreign relations and preemption considerations in federal law)