Licci ex rel. Licci v. Lebanese Canadian Bank, SAL
739 F.3d 45
2d Cir.2013Background
- Plaintiffs are civilians injured (or relatives of those killed) in 2006 Hizballah rocket attacks in Israel who sued banks that allegedly facilitated funds for the Shahid Foundation.
- Plaintiffs alleged Lebanese Canadian Bank routed wire transfers through a correspondent account at American Express Bank Ltd. (AmEx) in New York, and that AmEx’s facilitation breached a duty and caused plaintiffs’ injuries.
- The Second Circuit (per curiam) previously held that New York choice-of-law rules apply and concluded New York law governs the negligence claim against AmEx; under New York law AmEx owes no duty and the claim fails.
- After that opinion, appellants sought leave to file a panel rehearing petition and cited a First Department decision (Elmaliach v. Bank of China) arguing that the place-of-injury should govern conduct-regulating choice-of-law conflicts.
- The court granted leave to file the rehearing petition but denied the petition, rejecting Bank of China’s interpretation and reaffirming that New York law governs conduct-regulating rules where the alleged tortious conduct occurred in New York.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for negligence where defendant’s conduct occurred in NY but injury occurred in Israel | Apply Israeli law (place of injury) as First Department held in Bank of China | Apply New York law because the alleged tortious conduct and AmEx’s operations occurred in New York | New York law governs conduct-regulating rules where the tortious conduct occurred in NY; Bank of China misapplied Schultz |
| Binding effect of Appellate Division (First Dept.) decision | Bank of China should control persuasive precedent | New York Court of Appeals precedent (Schultz) controls; Appellate Div. not binding if contrary | Appellate Division is not controlling over Court of Appeals; Bank of China is unpersuasive here |
| Proper interpretation of Schultz interest-analysis framework | Schultz supports place-of-injury rule for conduct cases | Schultz differentiates conduct-regulating vs loss-allocating rules—place of conduct governs conduct-regulating rules | Schultz supports applying law of jurisdiction where conduct occurred for conduct-regulating rules |
| Whether AmEx remains liable under governing law | New law (First Dept.) would create liability under Israeli law | Under New York law AmEx owes no duty; no liability | AmEx remains not liable under New York law; court adheres to original dismissal against AmEx |
Key Cases Cited
- Schultz v. Boy Scouts of Am., 65 N.Y.2d 189 (N.Y. 1985) (establishes New York interest-analysis approach distinguishing conduct-regulating vs loss-allocating rules)
- Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66 (N.Y. 1993) (explains interest analysis and that place of tort generally governs conduct-regulating rules)
- In re Allstate Ins. Co. (Stolarz), 81 N.Y.2d 219 (N.Y. 1993) (supports applying law of locus for conduct-regulating issues)
- Babcock v. Jackson, 12 N.Y.2d 473 (N.Y. 1963) (reasoning that jurisdiction of defendant’s conduct has predominant interest in regulating due care)
- Estate of Bosch v. Comm’r, 387 U.S. 456 (U.S. 1967) (federal courts must follow state high-court pronouncements; intermediate appellate decisions are persuasive but not controlling)
- Lerner v. Fleet Bank, N.A., 459 F.3d 273 (2d Cir. 2006) (applies New York law to foreclose bank liability in similar correspondent-banking negligence claims)
- Elmaliach v. Bank of China Ltd., 110 A.D.3d 192 (1st Dep’t 2013) (Appellate Division decision advocating place-of-injury focus; rejected as misapplication of Schultz by this court)