999 F.3d 842
2d Cir.2021Background
- Plaintiffs are U.S. citizens injured in the July–August 2006 rocket attacks that they allege were carried out by the FTO Hizbollah.
- Plaintiffs sued Lebanese Canadian Bank (LCB), alleging (inter alia) aiding-and-abetting liability under JASTA based on LCB's banking services to Hizbollah-affiliated customers (Bayt al-Mal, Yousser, Shahid) from at least 2003.
- The SAC alleges LCB granted special exceptions to reporting rules, processed millions in wire transfers (via a U.S. correspondent), and ignored a 2002 U.N. report and applicable due-diligence/sanctions obligations.
- The district court dismissed the SAC under Rule 12(b)(6), finding insufficient nonconclusory allegations as to (a) Halberstam’s “general awareness” element and (b) the “knowing and substantial assistance” element.
- On appeal plaintiffs limited their challenge to the JASTA aiding-and-abetting dismissal, arguing the district court misapplied Halberstam and failed to draw permissible inferences from the SAC.
- The Second Circuit vacated the dismissal as to the JASTA aiding-and-abetting claim and remanded for further proceedings, holding the SAC plausibly alleged indirect, knowing, substantial assistance and general awareness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether JASTA permits aiding-and-abetting liability for indirect assistance (through intermediaries). | JASTA is meant broadly and reaches persons who provide substantial assistance directly or indirectly. | JASTA requires substantial assistance “to” the person who committed the terrorist act (i.e., direct assistance). | Court: JASTA covers indirect assistance; the statute’s text and purpose show Congress intended broad coverage. |
| Whether the SAC plausibly pleaded Halberstam’s “general awareness” (that LCB was generally aware it played a role in terrorism). | General awareness is plausibly inferred from Hizbollah’s public admissions that the named customers were integral parts of Hizbollah, LCB’s Lebanon presence, the customers’ long relationships with LCB, and LCB’s regulatory exemptions to them. | Allegations are conclusory; plaintiffs do not allege LCB actually read the cited sources or that the customers were U.S.-designated before 2006. | Court: The SAC, read as a whole, plausibly alleges facts and inferences permitting general-awareness—district court erred by elevating “awareness” requirement and by demanding U.S. designation. |
| Whether the SAC plausibly pleaded the Halberstam third element—knowing and substantial assistance. | LCB gave special exemptions that allowed concealment of large daily deposits, processed millions through correspondent banks, and reacted to a U.N. report by increasing credit—supporting an inference of knowing, substantial assistance. | Allegations do not show funds reached Hizbollah or that LCB intended Hizbollah to receive funds; at best routine banking. | Court: Given context and the SAC’s allegations, reasonable inferences support that LCB knowingly provided substantial assistance (even if indirectly); dismissal was improper. |
| Whether the district court correctly applied Halberstam and federal pleading standards. | District court misstated and overly narrowed Halberstam’s “general awareness,” failed to draw permissible inferences, and misapplied Iqbal/Twombly. | District court properly required nonconclusory factual allegations showing awareness and substantial assistance. | Court: District court misapplied Halberstam and pleading rules; vacated dismissal as to JASTA aiding-and-abetting and remanded. |
Key Cases Cited
- Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983) (three-element aiding-and-abetting framework and six-factor test for substantial assistance)
- Linde v. Arab Bank, PLC, 882 F.3d 314 (2d Cir. 2018) (applies Halberstam to bank-aiding claims; explains "general awareness" standard)
- Siegel v. HSBC N. Am. Holdings, Inc., 933 F.3d 217 (2d Cir. 2019) (affirmed 12(b)(6) dismissal where complaint failed to plead that bank knowingly played a role or provided substantial assistance)
- Weiss v. Nat'l Westminster Bank PLC, 993 F.3d 144 (2d Cir. 2021) (affirmed denial of leave to add JASTA claims where discovery record showed no knowing, substantial assistance)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading plausibility standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))