Francis GATES, et al., Plaintiffs-Appellees, and AT & T Corporation, Respondent-Appellee, v. SYRIAN ARAB REPUBLIC, et al., Defendants.
Appeals of: Patrick Scott Baker, et al., Intervenors-Appellants.
Nos. 13-2280, 14-1452
United States Court of Appeals, Seventh Circuit
June 18, 2014
Rehearing and Rehearing En Banc Denied July 17, 2014.*
755 F.3d 568
Before BAUER, FLAUM, and HAMILTON, Circuit Judges.
Argued Feb. 19, 2014.
The record establishes that Henderson needed counsel and needed counsel‘s assistance at every phase of litigation. And there is a reasonable likelihood that the presence of counsel would have made a difference in the outcome of this case. In the sea of indigent litigants without counsel, Henderson should have stood out as someone who needed counsel the most.
III. Conclusion
We REVERSE the district court‘s judgment and REMAND the case for further proceedings consistent with this opinion.
John F. Salter, Attorney, Barnes Law Group, LLC, Marietta, GA, Edward J. Lesniak, Attorney, Burke, Warren, Mac-
Mark William Lewis, Attorney, AT & T Services, Chicago, IL, for Respondent-Appellee.
Michael Dockterman, Attorney, Elizabeth A. Peters, Attorney, Edwards Wildman Palmer LLP, Chicago, IL, for Intervenors-Appellants.
HAMILTON, Circuit Judge.
State-sponsored terrorism is an exception to the immunity usually available to foreign sovereigns in United States courts. The Foreign Sovereign Immunities Act (FSIA) expressly allows civil claims against foreign governments and their agencies and instrumentalities for acts of state-sponsored terrorism. See
The origins of these appeals lie in terrorist violence sponsored by Syria. The appellants here are the Baker plaintiffs. Their claims stem from the 1985 hijacking of EgyptAir flight 648 by terrorists from Abu Nidal, a group supported by the Syrian government. In a standoff at the airport in Malta, hijackers shot plaintiffs Patrick Scott Baker and Jackie Nink Pflug in the head. Both survived somehow, but with serious injuries and permanent disabilities. Scarlett Marie Rogenkamp was also shot in the head and died. By the time the hijacking was resolved, 58 of the 95 passengers and crew had died. The Baker plaintiffs in these appeals are Mr. Baker, Mrs. Pflug, their family members, and the family of Ms. Rogenkamp.
The appellees are the Gates plaintiffs. They are the mother and sister of Olin Eugene “Jack” Armstrong and the widow and daughter of Jack L. Hensley. Mr. Armstrong and Mr. Hensley were civilian contractors working with the U.S. military in Iraq. They were kidnapped in September 2004 by al-Qaeda in Iraq, which was also sponsored by the Syrian government. Mr. Armstrong and Mr. Hensley were then murdered. The gruesome murders of both men, who were conscious as they were slowly killed, were recorded on video that was made public by the terrorists.
Under the FSIA, both the Baker plaintiffs and the Gates plaintiffs have secured nine-figure judgments against the Syrian Arab Republic. The judgments hold Syria, designated by the United States government as a state sponsor of terrorism, responsible for the brutal acts of terror that gave rise to the plaintiffs’ suits. Both groups’ judgments against Syria remain unsatisfied, and both have sought to satisfy them in part by attaching Syrian assets in the Northern District of Illinois.
In a series of decisions, the district court in the Northern District of Illinois held that the Gates plaintiffs’ liens on assets in Illinois are entitled to priority over those of the Baker plaintiffs. In the two orders we review here, the district court ordered those holding the assets to turn them over to the Gates plaintiffs. The Baker plaintiffs, who were intervenors in the district court, have appealed both final turnover orders. We affirm both orders in favor of the Gates plaintiffs.
We explain in Part I the legal structures and rules for obtaining and enforcing judgments under the FSIA in cases of state-
I. The FSIA and Civil Remedies for State-Sponsored Terrorism
Congress has chosen civil litigation under the FSIA rather than international diplomacy as the monetary remedy for U.S. victims of state-sponsored acts of terror. These appeals stem from the fact that the FSIA does not provide a mechanism for distributing equitably among different victims any Syrian assets in the United States that are subject to attachment. Instead, victims who finally obtain judgments must then engage in the costly, burdensome, and often fruitless task of searching for available assets.
These victims of terror can then find themselves pitted in a cruel race against each other—a race to attach any available assets to satisfy the judgments. The terms of the race are essentially winner-take-all rather than any equitable sharing among victims of similar losses. Under the FSIA‘s compensation scheme, a terrorism judgment against Syria can be satisfied only at the expense of other terrorism victims.1
Lawsuits against foreign states in United States courts raise special substantive and procedural problems. The central substantive problem such suits must confront is foreign sovereign immunity. The FSIA codifies the general rules with respect to both immunity from suit and immunity from attachment of assets. See
The FSIA adopted a “comprehensive set of legal standards governing claims of immunity in every civil action against a foreign state.” Republic of Argentina v. NML Capital, Ltd., 573 U.S. 134, 134 S.Ct. 2250, 2255, 189 L.Ed.3d 234, 2014 WL 2675854 (2014) (slip op. at 6), quoting Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 488 (1983). The FSIA is therefore the sole basis for jurisdiction over a foreign state in a United States court. Rubin, 637 F.3d at 793-94; In re Islamic Republic of Iran Terrorism Litigation, 659 F.Supp.2d 31, 38-39 (D.D.C. 2009). Any suit against a state sponsor of terrorism and any attachment pursuant to a judgment against a state sponsor of terrorism must fall within the FSIA‘s statutory exceptions to foreign sovereign immunity.
Suing foreign states in United States courts also raises procedural issues. In particular, it is difficult to ensure that a foreign state receives notice of a United States proceeding against it and has a meaningful opportunity to participate. The FSIA establishes special service and notice requirements for suits against foreign states, including notice of default judgments obtained against them. See
These provisions work together to ensure that foreign states receive sufficient notice of United States legal proceedings instituted against them, as well as an opportunity to participate in those proceedings and an opportunity to respond to a default judgment before attachment of and execution against the foreign state‘s assets in the United States.
The lien priority dispute between the Gates and Baker plaintiffs presents two principal legal issues under this statutory scheme. The first is whether
II. Factual and Procedural Background
A. Securing the Judgments
Against this legal backdrop, we turn to the details of the dispute in these appeals. Syria has been designated a state sponsor of terrorism since 1979. The Gates plaintiffs and the Baker plaintiffs both filed suits against Syria in the United States District Court for the District of Columbia under the FSIA‘s then-current terrorism exception to foreign sovereign immunity, which was codified at
While both suits were pending, Congress repealed
Both cases then proceeded under
B. The Race for Syrian Assets
The District Court for the District of Columbia issued an order pursuant to
The Gates plaintiffs and the Baker plaintiffs each subpoenaed the U.S. Department of Treasury Office of Foreign Assets Control to obtain information about any Syrian assets in the United States that could be attached to satisfy their judgments. The Office responded pursuant to a protective order and told both groups that some Syrian assets were located in the Northern District of Illinois. Both groups of plaintiffs rushed to register their judgments there and to attach the funds pursuant to
The FSIA does not provide its own attachment and execution procedures. See Peterson v. Islamic Republic of Iran, 627 F.3d 1117, 1130 (9th Cir. 2010).
A lien can be created under Illinois law by service of a “citation to discover assets.” See
On December 8, 2011, the Gates plaintiffs registered their judgment in the Northern District of Illinois and served on JP Morgan Chase Bank a citation to discover Syrian assets it might have been holding. They filed their
The bank‘s response to the Gates plaintiffs’ citation identified two groups of responsive accounts relevant to this appeal: an AT & T account containing frozen funds belonging to Syrian Telecom, and two accounts containing blocked electronic funds transfers belonging to the Banque Centrale de Syrie. Based on this information, the Gates plaintiffs served AT & T with a citation to discover assets on February 9, 2012 seeking any other responsive AT & T assets besides the account at JP Morgan Chase Bank. The Gates plaintiffs also pursued other responsive accounts at JP Morgan Chase Bank.
On February 13, the Baker plaintiffs filed a motion to intervene in the Gates case. The Baker plaintiffs had not registered their judgment in the Northern District of Illinois until December 15, 2011, several days after the Gates plaintiffs. (See Case No. 1:11-cv-08913.) Unlike the Gates plaintiffs, however, the Baker plaintiffs sought and obtained a new
The Baker plaintiffs argued that the Gates plaintiffs’ failure to obtain a new
III. 28 U.S.C. § 1610(c)
The Baker plaintiffs argue that the Gates plaintiffs could not attach either group of the Syrian assets in the Northern District of Illinois without obtaining a new
After the Gates plaintiffs secured their judgment, the District Court for the District of Columbia issued on August 23, 2011 an order under
A. The Scope of § 1610(c)
First,
Section 1610(c) applies to “attachment or execution referred to in subsections (a) and (b) of this section.” Subsections (a) and (b) establish a number of specific exceptions to foreign sovereign immunity from attachment or execution. Those exceptions apply based upon a variety of factors, including the type of property, the use of the property, whether it was related to the lawsuit in question, and in some cases the type of lawsuit.
The Gates plaintiffs are not seeking attachment under
The decision to include references to
Section 1610(g) was added to the FSIA as part of the 2008 FSIA Amendments. The other 2008 FSIA Amendments undermine any suggestion that Congress’ omission of a reference to
Congress also made several changes to the FSIA‘s attachment provisions to facilitate satisfaction of judgments obtained under
Despite having amended
Faced with
By contrast,
This language was intended to avoid limits the Supreme Court had imposed on the ability of litigants to attach the assets of foreign state agencies and instrumentalities under
Finally, our interpretation of
B. One § 1610(c) Order Per Judgment is Enough
Even if
Where such a determination is required, one suffices for attachment efforts throughout the United States. There is no reason for later courts to revisit an earlier determination that sufficient time has passed to allow attachment. Time‘s arrow always moves in the same direction. As the district court explained here, the amount of time between the entry of judgment and the attempt to attach property will only grow, so the passage of time between the first and later attachment attempts can only strengthen the case for a
The Baker plaintiffs rely on Levin v. Bank of New York, 2011 WL 812032 (S.D.N.Y. March 4, 2011), to support a contrary result. Among the various plaintiffs in Levin, two groups are relevant to this issue. The Levins obtained a judgment against Iran under
Both situations differed markedly from this case. First and foremost, since the Levins had obtained their judgment under
The Gates plaintiffs obtained a determination from the D.C. District Court that sufficient time had passed following the entry of their judgment for attachment to proceed. They were not required to seek a duplicative determination of the same question by the Northern District of Illinois before attaching the Syrian assets. For two independent reasons, then,
IV. The New York Proceedings and Related Issues
The Gates plaintiffs attached the Syrian assets in the Northern District of Illinois before the Baker plaintiffs did, and as noted above, under Illinois law, the parties first in time are treated as first in right. We turn now to several remaining issues, including whether proceedings filed by the Baker plaintiffs in the Southern District of New York affect the priority of the Gates plaintiffs’ liens on the Syrian assets.
A. The Baker Plaintiffs’ New York Writs of Execution
After the Gates plaintiffs had registered their judgment in the Northern District of Illinois and served citations to discover assets, the Baker plaintiffs filed separate, parallel proceedings in the Southern District of New York. United States Marshals served JP Morgan Chase Bank in New York with two New York writs of execution: one on February 23, 2012, and the other on November 9, 2012.
The Baker plaintiffs claim that these writs of execution perfected a lien under New York law over the Banque Centrale de Syrie (BCS) funds in the hands of JP Morgan Chase Bank. The Baker plaintiffs also claim that the Gates plaintiffs’ citations were not enough to perfect liens over the Syrian funds under Illinois law and that liens are not perfected under Illinois law until entry of a turnover order. If that were correct, the Gates plaintiffs would not have perfected a lien on the BCS funds until the district court entered a turnover order regarding those funds on November 15, 2013, after the Baker plaintiffs claim they perfected a lien on the BCS funds under New York law.
We disagree. For starters, the Baker plaintiffs made this argument for the first time in their motion for reconsideration of the Illinois district court‘s turnover order regarding the BCS funds. That was too late to raise a new legal theory that could have been raised earlier in the case. Russell v. Delco Remy Division of General Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995) (motions for reconsideration “may not be used to raise novel legal theories that a party had the ability to address in the first instance“). Accordingly the argument is forfeited.
In any event, on the merits the Baker plaintiffs are wrong about Illinois law. Service of a citation to discover assets both creates and perfects a lien under Illinois law at the time of service.
B. The Baker Plaintiffs’ Request for Dismissal
Next, the Baker plaintiffs ask us to dismiss this case altogether in favor of their proceedings in the Southern District of New York. They argue that the Syrian assets held by AT & T are actually located in New York rather than Illinois. Because the Baker plaintiffs have already commenced actions in the Southern District of New York to attach the Syrian assets, dismissal of the Gates plaintiffs’ Illinois case would place the Baker plaintiffs ahead of the Gates plaintiffs.
We see utterly no reason to dismiss this case. It is undisputed that the Northern District of Illinois has personal jurisdiction over all the parties, including AT & T and JP Morgan Chase Bank. It is also undisputed that the Northern District of Illinois can attach the funds even if they are located in New York. Under Illinois law, a court can attach a party‘s intangible
Parallel proceedings in separate federal courts should ordinarily prompt judicial action to avoid duplicative efforts. See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (general rule to avoid duplicative litigation in federal courts); Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183-84, 72 S.Ct. 219, 96 L.Ed. 200 (1952); Crowley Cutlery Co. v. United States, 849 F.2d 273, 279 (7th Cir. 1988) (dismissing later-filed duplicative case); Martin v. Graybar Electric Co., 266 F.2d 202, 203 (7th Cir. 1959) (reversing denial of injunction against duplicative case); 6 Wright & Miller, Federal Practice & Procedure § 1418.
Here the district court chose not to dismiss the earlier-filed Gates action but instead enjoined the Baker plaintiffs from pursuing their duplicative action in New York. The district court weighed the relevant considerations and did not abuse its discretion in doing so. The Northern District of Illinois obtained jurisdiction over the parties and the Syrian funds before the Southern District of New York did, and there is no claim that the Northern District of Illinois is an inconvenient fo-
We are mindful of the fact that the Baker plaintiffs, like the Gates plaintiffs, are the victims of horrific terrorist acts for which Syria is responsible. We also understand that the current statutory scheme pushes the holders of judgments based on state-sponsored terrorism to pursue all possible avenues to secure even partial justice. Such duplicative litigation, however, wastes judicial and party resources and needlessly muddles proceedings in both districts.
C. The Gates Plaintiffs’ Motion to Dismiss Appeals
Finally, showing that neither side has a monopoly on slick procedural maneuvers, after we held oral argument the Gates plaintiffs filed a motion to dismiss or for summary affirmance. The motion argues that the Baker plaintiffs made a decisive procedural error by failing to file a separate notice of appeal in the interpleader action filed by JP Morgan Chase Bank. In the district court, Judge Kendall wrote one order dated February 3, 2014, and docketed it in both the Gates plaintiffs’ attachment suit and the interpleader action.
The Gates plaintiffs contend that the order was in effect a double judgment and that the Baker plaintiffs, by appealing only in the Gates plaintiffs’ attachment proceeding, allowed the identical order to become final in the interpleader case. As the Gates plaintiffs see things, when the time to appeal ran out in the interpleader action, the same order that is on appeal here in No. 14-1452 became a final judgment in the interpleader action that is entitled to res judicata or collateral estoppel effect, meaning that we should either summarily dismiss these appeals or affirm on that basis.
We have no doubt that such a result would stun Judge Kendall, who carefully framed her order of February 3, 2014 to resolve the interpleader action while also avoiding any interference with the then-pending appeal to this court in No. 13-2280. The February 3, 2014 order resolved the interpleader action by ordering JP Morgan Chase Bank to deposit the BCS funds in question into the district court‘s registry pursuant to
Under these circumstances, we agree with the Baker plaintiffs that there was no need for them to have filed a second notice of appeal. Both res judicata and collateral estoppel are rooted in equity. Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 333-34, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971) (“no one set of facts, no one collection of words or phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end, decision will necessarily rest on the trial courts’ sense of justice and equity.“); see also Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 92 L.Ed. 898 (1948). In light of the district court‘s careful efforts to limit the effects of its order, it would not be equitable to resolve these appeals by applying either doctrine.
Conclusion
The Gates plaintiffs have complied with the requirements of the FSIA and have