United States v. Assa Co. Ltd.
934 F.3d 185
2d Cir.2019Background
- The Government filed a civil-forfeiture action in 2008 seeking forfeiture of property (notably interests in 650 Fifth Avenue) under 18 U.S.C. § 981 based on alleged IEEPA and money‑laundering violations tied to Iranian control.
- Defendants included Assa Corporation (NY corp) and Assa Co. Ltd. (Jersey corp); the Government alleged Bank Melli (owned/controlled by Iran) effectively controlled these entities.
- The district court granted summary judgment for the Government in 2013, disposing of a statute‑of‑limitations defense sua sponte without prior notice or opportunity to respond.
- In 2016 this Court vacated the judgment as to Alavi and 650 Fifth Ave. Co. for that procedural error (In re 650 Fifth Ave.), but Assa’s forfeiture judgment remained until Assa later appealed after final judgment.
- On Assa’s appeal the Second Circuit considered whether the FSIA bars in rem forfeiture of foreign‑state property and whether the district court erred by sua sponte resolving the statute‑of‑limitations defense without notice.
Issues
| Issue | Plaintiff's Argument (United States) | Defendant's Argument (Assa) | Held |
|---|---|---|---|
| Whether the FSIA bars in rem civil‑forfeiture suits against property owned by a foreign state | FSIA does not displace ordinary jurisdictional statutes for in rem forfeiture by the U.S.; forfeiture statutes (28 U.S.C. §§ 1345, 1355) authorize the suit | If Assa is a foreign state/agency under the FSIA, the FSIA gateway applies and its property is immune from in rem forfeiture because FSIA governs suits "against a foreign state" | Court held FSIA does not immunize foreign‑state property from in rem civil‑forfeiture; jurisdiction proper under §§ 1345 and 1355 (FSIA applies only to suits against a foreign state, not suits against its property) |
| Whether district court properly resolved statute‑of‑limitations defense sua sponte on summary judgment without notice (Fed. R. Civ. P. 56(f)) | Error was procedural but harmless; record lacks evidence creating a material dispute on timeliness | Sua sponte rejection of statute‑of‑limitations defense without notice violated Rule 56(f) and prejudiced defendants | Court vacated the judgment as to Assa on this ground and remanded for proceedings giving Assa notice and opportunity to respond |
| Whether the district court abused discretion by denying stay of proceedings | Government did not need a stay; proceedings timely | Assa argued stay warranted pending related proceedings and clarifications | Court rejected Assa’s stay arguments (addressed in accompanying summary order) |
| Whether various discovery orders were abused | Government required discovery to develop record | Assa claimed discovery rulings were overbroad/abusive | Court found no abuse of discretion in the challenged discovery rulings (addressed in summary order) |
Key Cases Cited
- Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989) (FSIA is the sole basis for obtaining jurisdiction over a foreign state itself)
- Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480 (1983) (FSIA enacted to replace ad hoc immunity determinations and State Department suggestions of immunity)
- In re 650 Fifth Ave. & Related Props., 830 F.3d 66 (2d Cir. 2016) (vacatur for parties where district court sua sponte rejected statute‑of‑limitations defense without notice)
- Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005) (federal courts are courts of limited jurisdiction; both Article III and statutory authorization required)
- In re B‑727 Aircraft Serial No. 21010, 272 F.3d 264 (5th Cir. 2001) (holding § 1330 confers jurisdiction over in personam claims against foreign states, not in rem actions)