FIONA HAVLISH, ET AL., Plаintiffs-Appellees, v. 650 FIFTH AVENUE COMPANY, ALAVI FOUNDATION, Defendants-Appellants, ASSA CORPORATION, ASSA CO. LTD., Defendants.
17-3278(L), 17-3243(Con), 17-3251(Con), 17-3254(Con), 17-3255(Con), 17-3260(Con), 17-3261(Con), 17-3262(Con), 17-3264(Con), 17-3265(Con), 17-3267(Con), 17-3268(Con), 17-3269(Con), 17-3271(Con), 17-3272(Con), 17-3276(Con)
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August 9, 2019
PARKER, WESLEY, and CHIN, Circuit Judges.
August Term 2018 (Argued: May 1, 2019)
* The Clerk of the Court is directed to amend the official caption as set forth above.
These consolidated appeals ask whether two entities (the “Defendants“) must turn over substantial real and financial property interests to hundreds of terrorism victims holding default judgments against the Islamic Republic of Iran. The victims allege that the Defendants should be treated as the “foreign state” оf Iran under
We hold that the district court violated the mandate we issued in a previous decision instructing it not to send the FSIA claims to trial. We also hold that the court violated the law of the case by finding that 650 Fifth Avenue Company is a foreign state under the FSIA. We REVERSE the judgment on these claims and REMAND for the court to enter judgment for the Defendants.
Without reaching the merits of the TRIA claims, we hold that the district court abused its discretion by precluding two of the Defendants’ witnesses from testifying at trial. We therefore REVERSE the underlying order and VACATE the judgment on the TRIA claims. We also REMAND for a new trial on these claims.
The Defendants additionally challenge the district court‘s decision to deny them a jury trial on the TRIA claims upon finding that the Defendants waived their alleged jury right. Without reaching the court‘s waiver finding, we hold that TRIA § 201 litigants lack the right to a jury trial in actions against a state sponsor of terrorism, including its agencies or instrumentalities. We AFFIRM the court‘s decision denying a jury trial on this ground.
We therefore AFFIRM in part, REVERSE in part, VACATE in part, and REMAND for a new trial on the TRIA § 201 claims.
JAMES L. BERNARD, Stroock & Stroock & Lavan LLP, New York, NY (Curtis C. Mechling, Patrick N. Petrocelli, Pamela S. Takefman, Stroock & Stroock & Lavan LLP, New York, NY; Liviu Vogel, Salon Marrow Dyckman Newman & Broudy LLC, New York, NY; Timothy B. Fleming, Wiggins Childs Pantazis Fisher Goldfarb PLLC, Washington, DC; Ralph P. Dupont, Barbara J. Dupont, Dupont Law Firm LLP, Stamford, CT; Dale K. Cathell, Richard M. Kremen, DLA Piper LLP (US), Baltimоre, MD; Peter R. Kolker, Zuckerman Spaeder LLP, Washington, DC; Anant Kumar, Zuckerman Spaeder LLP, New York, NY, on the brief), for Plaintiffs-Appellees.
DANIEL S. RUZUMNA, Patterson Belknap Webb & Tyler LLP, New York, NY (Diana M. Conner, Leigh E. Barnwell, Patterson Belknap Webb & Tyler LLP, New York, NY; John Gleeson, Matthew E. Fishbein, Debevoise & Plimpton LLP, New York, NY, on the brief), for Defendants-Appellants.
Over the past few decades, hundreds of terrorism victims have obtained default judgments against the Islamic Republic of Iran in federal court. Iran has yet to satisfy these judgments, and the victims have returned to thе courts seeking to execute their judgments through the attachment of Iranian assets located within the United States. Among these individuals are the hundreds of Plaintiffs-Appellees in these consolidated appeals (the “Judgment Creditors“). In the actions below, the Judgment Creditors sued the Alavi Foundation and 650 Fifth Avenue Company (the “Defendants“), alleging that the Defendants are sufficiently close to Iran that their assets are subject to attachment and execution under the Foreign Sovereign Immunities Act (“FSIA“) and the Terrorism Risk Insurаnce Act (“TRIA“). After nearly a decade of litigation, including a 2016 appeal to this Court1 and a month-long bench trial, the United States District Court for the Southern District of New York (Forrest, J.) found for the Judgment Creditors on their claims under both statutes. The court ordered the Defendants to turn over substantial property interests, including their stakes in 650 Fifth Avenue (the “Building“), a 36-story commercial skyscraper in Midtown Manhattan. Kirschenbaum v. 650 Fifth Ave. & Related Props., 257 F. Supp. 3d 463 (S.D.N.Y. 2017).
The Defendants argue that the district court committed several errors requiring us to reverse or vacate the judgment. Wе agree.
First, the district court violated both the mandate from our 2016 decision and the law of the case by sending the FSIA claims to trial. We reverse the judgment on the FSIA claims and remand for the court to enter judgment on these claims for the Defendants.
Second, the district court abused its discretion by precluding two former Alavi board members from testifying at trial. We reverse the underlying order. This holding requires us to vacate the judgment and remand for a new trial on the Judgment Creditors’ TRIA § 201 claims.
The Defendants also argue that the district court erroneously held that they waived their alleged right to a jury trial on the TRIA claims. We need not reach this question because no right to a jury trial attaches in TRIA § 201 actions pled against a state sponsor of terrorism, including its agencies or instrumentalities.
We therefore affirm in part, reverse in part, vacate in part, and remand for a new bench trial on the TRIA § 201 claims.
BACKGROUND2
A. The Parties
The Judgment Creditors are direct and indirect victims of terrorist attacks linked to the Islamic Republic of Iran. Kirschenbaum, 830 F.3d at 117. While we do not mean to look past the stories giving rise to each of their claims, the relevant fact for the purpose of these appeals is that these individuals all have unsatisfied judgments for money damages against Iran.3
B. Pleadings, Early Developments, and Summary Judgment
1. The Complaints
The Judgment Creditors began filing the turnover lawsuits giving rise to these appeals in December 2008, shortly after the Government initiated a civil-forfeiture action against Assa‘s real and financial property interests. Their complaints allege that the Defendants, through their connections to Irаn, are a “foreign state” under the FSIA and a “terrorist party” under TRIA. Under both statutes, the Judgment Creditors seek to enforce their judgments against Iran through the attachment and execution of the Defendants’ domestic properties and interests.
2. Early Developments
In 2010, the United States District Court for the Southern District of New York (Holwell, J.) consolidated these actions for pretrial purposes. In 2012, the Southern District reassigned the cases to Judge Forrest.
The Judgment Creditors eventually moved for summary judgment and turnover of the Defendants’ proрerties on their FSIA and TRIA claims, with the exception of their FSIA § 1610(b) claims, which they reserved. The district court granted the motion.
Much of the summary judgment opinion focused on whether the district court had subject matter jurisdiction under the FSIA and TRIA. The court concluded on three alternative grounds that it did. First, it held that the Defendants could be treated as Iran itself, which suffices for jurisdiction under both statutes. In re 650 Fifth Ave. & Related Props., No. 08 Civ. 10934 (KBF), 2014 WL 1516328, at *10-11 (S.D.N.Y. Apr. 18, 2014) (citing
Even where a court has jurisdiction over a turnover action involving a foreign state, the FSIA makes “the property in the United States of a foreign state immune from attachment arrest and execution [subject to certain exceptions].”
3. The First Appeal
In 2016, we vacated the judgment. See Kirschenbaum, 830 F.3d at 117. We found error in each of the district court‘s three alternative bases for jurisdiction. On the first ground, we rejected the court‘s definition of “foreign state,” noting that the court had improperly drawn it from an executive order and federal regulations. Id. at 123-25. Applying the definition outlined in our precedent, we concluded that the Defendants are not foreign states “as a matter of law” under the FSIA. Id. at 141. On the third ground, we rejected “as a matter of law” the court‘s theory that the Defendants are Iran‘s alter egos under Bancec, finding a “lack of evidence demonstrating Iran‘s day-to-day control of Alavi.” Id. at 130.
Much of our analysis turned on the second ground: the court‘s “agency or instrumentality” finding under the FSIA. See id. at 127-28. Looking to FSIA § 1603(b)‘s definition of that term, we focused on subsection (b)(3)‘s requirement that an agency or instrumentality must be “neither a citizen of a State of the United States as defined in [28 U.S.C. §§ 1332(c) and (e)], nor created under the laws of any third country.” Id. at 126. The district court had found that the Defendants were Iran, and were therefore Iranian citizens, under Bancec‘s alter-ego theory. Id. In the court‘s view, this was the only reason the Defendants satisfied § 1603(b)(3).
We first explained that, because Alavi is incorporated in New York, it “is unequivocally a ‘citizen of a State of the United States’ that falls outside the ambit of agency or instrumentality status under § 1603(b)(3). See
We reached the same conclusion with respect to 650 Fifth Ave. Co., albeit on a different ground. We noted that 650 Fifth Ave. Co. appeared to satisfy subsection (b)(3) because as a partnership—as opposed to a corporation like Alavi—it is not a “citizen of a State” under
We reached a different conclusion on the TRIA claims. For TRIA § 201 to apply, the defendant must be a “terrorist party” or an “agency or instrumentality” thereof. See TRIA § 201(a). Although Iran is a terrorist party under the statute, we held that the Defendants could not be treated as Iran itself under TRIA for the same reasons that we rejected such treatment under the FSIA. Kirschenbaum, 830 F.3d at 131-32. Turning then to the “agency or instrumentality” issue, we found that this phrase has a different definition in TRIA than it does in the FSIA. Id. at 132-35.6 We remanded for further proceedings because the issue of whether the Defendants fit TRIA‘s “agency or instrumentality” definition turned on material questions of fact. Id. at 135-37. We identified two specific material questions that the district court neеded to resolve: “(1) [whether the] Defendants are, indeed, agencies or instrumentalities for TRIA purposes, and (2) [whether] their properties are ‘blocked assets’ [under § 201 of TRIA].” Id. at 131. Our remand instruction stated that these two TRIA issues were “the only issues returning to the [district court] for further proceedings.” Id. at 142 (emphasis added).
C. Proceedings on Remand
On remand, the Judgment Creditors sought permission to pursue FSIA § 1610(b)(3) claims against 650 Fifth Ave. Co. at trial. The district court granted this request. It acknowledged our holding that the Judgment Creditors waived their ability to argue that 650 Fifth Ave. Co. is not a “citizen of a state” under
Turning to our mandate, the district court quoted our language stating that “the only issues returning” on remand were two questions about whether TRIA applied here. Id. at *3 (quoting Kirschenbaum, 830 F.3d at 142). However, the court reasoned that our mandate “is properly interpreted in the context of what was before the Second Circuit on appeal. It should not be read as the Second Circuit reaching out beyond those issues to foreclose as yet unlitigated issues that were nоt before it. Properly read against the appellate issues raised and decided, the Second Circuit‘s mandate does not preclude plaintiffs from pursuing their FSIA Section 1610(b)(3) claim now.” Id.
The district court scheduled a bench trial for May 30, 2017. The court planned for this trial to operate in tandem with the
In March 2017, the Defendants took the position that they were entitled to a jury trial on the TRIA claims. The district court disagreed, finding that the Defendants had waived their alleged right to a jury trial. The court noted that early in these proceedings, at least one party in each of the Judgment Creditor turnover actions had demanded a jury trial. But in 2013, the Judgment Creditors collectively withdrew their jury demands, explaining in a letter to the court that “[t]he FSIA explicitly prohibits jury trials in actions ‘against a foreign state.‘” J.A. 881 (quoting
Holding that the Defendants had thereby consented to the Judgment Creditors’ withdrawal of their demands, the court declined to decide whether TRIA litigants have the right to a jury trial.
D. The Trial and Judgment
The trial began as scheduled and lasted approximately one month. The day after the trial ended, the district court issued a 155-page opinion ruling in favor of the Judgment Creditors on their FSIA § 1610(b)(3) and TRIA § 201 claims. See Kirschenbaum, 257 F. Supp. 3d at 466. Its key conclusion was that the Government of Iran controlled Alavi and 650 Fifth Ave. Co. and used them to conceal its property holdings within the United States.
The district court began its legal analysis by holding that it had subject matter jurisdiction under the FSIA and TRIA. On the FSIA claims, it found that 650 Fifth Ave. Co. is Iran‘s agency or instrumentality under
Accordingly, the district court entered judgment for the Judgment Creditors on both their FSIA and TRIA claims. The Defendants timely appealed.
DISCUSSION
There are three issues on appeal. The first is whether the district court erroneously found for the Judgment Creditors on their FSIA § 1610(b)(3) claims. The second concerns the Defendants’ objections to several of the court‘s evidentiary rulings. The third challenges the court‘s denial of the Defendants’ demand for a jury trial on the TRIA claims.
I. The District Court Violated Our Mandate and the Law of the Case by Allowing the FSIA Claims to Proceed to Trial.
“A district court must follow the mandate issued by an appellate court.” Puricelli v. Republic of Argentina, 797 F.3d 213, 218 (2d Cir. 2015).7 “[W]here an issue was ripe for review at the time of an initial appeal but was nonetheless foregone, the mandate rule generally prohibits
permitting it to do so.” United States v. Ben Zvi, 242 F.3d 89, 95 (2d Cir. 2001). “Where a mandate limits the issues open for consideration on remand, a district court ordinarily cannot consider additional issues.” Puricelli, 797 F.3d at 218.
We directed the district court to consider two TRIA issues—and “only” those two issues—on remand. Kirschenbaum, 830 F.3d at 142. The court violated our mandate by allowing the Judgment Creditors to bring their FSIA § 1610(b)(3) claims to trial.
That error alone requires reversal. But even if the mandate had left room for consideration of the FSIA § 1610(b)(3) claims, we would still reverse becausе the district court‘s legal conclusions were contrary to the law of the case.
“When an appellate court has once decided an issue, the trial court, at a later stage of the litigation, is under a duty to follow the appellate court‘s ruling on that issue.” Doe v. New York City Dep‘t of Soc. Servs., 709 F.2d 782, 788 (2d Cir. 1983) (quoting United States v. Cirami, 563 F.2d 26, 32 (2d Cir. 1977)). Our 2016 decision held that the “Defendants do not qualify, as a matter of law, as the foreign state of Iran . . . see
Presented with the same issues on remand, the district court reached the opposite conclusions: that 650 Fifth Ave. Co. is a foreign state because it is Iran‘s “agency or instrumentality” under FSIA § 1603 and its alter ego under Bancec. The court‘s theory that our holdings applied only to the §§ 1610(a)(7) and (g) claims, leaving it free to consider the issues anew for the § 1610(b)(3) claims, seriously misperceives the law-of-the-case doctrine. When the Court of Appeals remands a matter to a district court, the lower court is bound not only by our resolution of the claims before us, but also of the legal issues we decided in the course of resolving those claims. We decided these issues “as a matter of law.” The district court lacked the authority to disagree with our holdings.
We reverse the judgment in favor of the Judgment Creditors and remand for the court to enter judgment for 650 Fifth Ave Co. on the FSIA § 1610(b)(3) claims.
II. The District Court Abused Its Discretion by Precluding Testimony from Two Former Alavi Board Members.
In a companion opinion involving the Government‘s overlapping civil-forfeiture trial against the Defendants, we conclude that the district court abused its discretion by precluding testimony from two former Alavi board members. See In re 650 Fifth Ave. & Related Props., No. 17-3258(L) (2d Cir. 2019). As the
We thus decline to consider the Defendants’ arguments that the district court erroneously ordered the turnover of their property under TRIA.9
III. No Right to a Jury Trial Attaches in TRIA Actions Seeking to Turn Over Property Belonging to a State Sponsor of Terrorism or an Agency or Instrumentality Thereof.
The final issue is whether the district court erroneously denied the Defendants’ demand for a jury trial on the TRIA claims. Although our holding vacating the judgment renders any error harmless, we must address this issue because we have ordered a new trial and the issue will most likely present itself again. “We review a district court‘s decision to deny a jury trial de novo.” Eberhard v. Marcu, 530 F.3d 122, 135 n.13 (2d Cir. 2008).
There are two issues here. The first is whether parties litigating under TRIA § 201 have the right to a jury trial when the defendant is “foreign state designated as a state sponsor of terrorism.” TRIA § 201. The second is whether, if they do, the district court erroneously held that the Defendants waived their jury right. We begin and end our discussion with the first question.10
The right to a jury trial in a civil action may come from either a statute or the Seventh Amendment. Where a statute creates the right, the inquiry stops there. See Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 345 (1998). Where a statute dоes not authorize jury trials, we look to the Seventh Amendment. TRIA is silent on the right to a jury trial.
The Seventh Amendment preserves the right to a jury trial in “Suits at common law” where the amount in controversy exceeds twenty dollars.
We need not pore through the English Reports to understand how the first factor applies here. In Ruggiero v. Compania Peruana de Vapores “Incа Сарас Yupanqui”, 639 F.2d 872 (2d Cir. 1981) (Friendly, J.), the plaintiffs argued that
A TRIA § 201 claim is not a suit for a judgment, but rather one to enforce a judgment already obtained. But Ruggiero makes clear that in eighteenth-century England, the judgment giving rise to a § 201 claim pled against a state sponsor of terrorism could not have existed because citizens lacked the ability to sue foreign states or their agencies and instrumentalities. Nо lawsuit meant no judgment, and no judgment meant no attachment and execution of the foreign state‘s property.
This finding is dispositive. The Seventh Amendment does not create a right to a jury trial, but merely preserves the right that existed at common law. See
No right to a jury trial exists in TRIA § 201 actions seeking the attachment and execution of property belonging to a state sponsor of terrorism, including its agencies or instrumentalities.13 For this reason, we hold without addressing the waiver finding that the district court did not erroneously deny the Defendants a jury trial.
CONCLUSION
- We REVERSE the judgment on the FSIA § 1610(b)(3) claims and REMAND for the district court to enter judgment for 650 Fifth Ave. Co. on these claims.
- We REVERSE the district court‘s orders precluding the former Alavi board members from testifying. If these cases return to trial, the court shall permit the Defendants to call them as
witnesses.14 - We VACATE the judgment on the TRIA § 201 claims, AFFIRM the court‘s decision denying a jury trial, and REMAND for a new bench trial on these claims and only these claims.
RICHARD C. WESLEY
UNITED STATES CIRCUIT JUDGE