Jenny RUBIN, et al., Plaintiffs-Appellees, and Deborah D. Peterson, et al., Intervenors-Appellees, v. THE ISLAMIC REPUBLIC OF IRAN, Defendant-Appellant, and Field Museum of Natural History and University of Chicago, the Oriental Institute, Intervenors.
No. 08-2805.
United States Court of Appeals, Seventh Circuit.
Argued Oct. 26, 2009. Decided March 29, 2011.
As Corrected April 1, 2011. Rehearing and Rehearing En Banc Denied June 6, 2011.*
783
* The Honorable Frank H. Easterbrook, Chief Judge, and the Honorable Richard A. Posner, Joel M. Flaum, Ilana Diamond Rovner, and Diane P. Wood, Circuit Judges, took no part in the consideration of this case.
Thomas G. Corcoran, Jr. (argued), Attorney, Berliner, Corcoran & Rowe, Washington, DC, for Defendant-Appellant.
David J. Cook (argued), Attorney, Cook Collection Attorneys, San Francisco, CA, for Intervenor-Appellee.
Susan M. Benton, Attorney, William P. Ferranti (argued), Attorney, Winston & Strawn LLP, Matthew G. Allison, Attorney, Baker & McKenzie, Chicago, IL, for Intervenors-Appellants.
Sharon Swingle (argued), Attorney, Department of Justice, Civil Division, Appellate Staff, for Amicus Curiae.
SYKES, Circuit Judge.
The Islamic Republic of Iran appeals two orders issued in connection with a long-running effort to collect on a large judgment entered against it for its role in a 1997 terrorist attack. The plaintiffs are American citizens who were injured in a brutal suicide bombing in Jerusalem, Israel, carried out by Hamas with the assistance of Iranian material support and training. The victims obtained a $71 million default judgment against Iran in federal district court in Washington, D.C., and then registered that judgment in the Northern District of Illinois for the purpose of attaching two collections of Persian antiquities owned by Iran but on long-term academic loan to the University of Chicago‘s Oriental Institute. They also sought to attach a third collection of Persian artifacts owned by Chicago‘s Field Museum of Natural History. They contend that this collection, too, belongs to Iran but was stolen and smuggled out of the country in the 1920s or 1930s and later sold to the museum. Iran‘s appeal requires us to consider the scope and operation of
The district court held that the immunity codified in
The district court‘s discovery order effectively rejected Iran‘s claim of sovereign immunity and is therefore immediately appealable under the collateral-order doctrine. The court‘s earlier order, which denied
Both orders are seriously flawed; we reverse. The district court‘s approach to this case cannot be reconciled with the text, structure, and history of the FSIA. Section 1609 of the Act provides that “the property in the United States of a foreign state shall be immune from attachment” unless an enumerated exception applies. (Emphasis added.) This section codifies the longstanding common-law principle that a foreign state‘s property in the United States is presumed immune from attachment. This presumptive immunity, when read with other provisions of the FSIA, requires the plaintiff to identify the specific property he seeks to attach; the court cannot compel a foreign state to submit to general discovery about all its assets in the United States. The presumption of immunity also requires the court to determine—sua sponte if neces-
I. Background
This appeal has its roots in a vicious terrorist attack. On September 4, 1997, Hamas carried out a triple suicide bombing in the crowded Ben Yehuda Street pedestrian mall in Jerusalem. See Campuzano v. Islamic Republic of Iran, 281 F.Supp.2d 258, 261 (D.D.C.2003). Five bystanders were killed and nearly 200 were injured. Hamas claimed responsibility for the bombing, and Israeli police arrested two Hamas operatives who participated in the attack. Id. at 261-62. They and other members of their Hamas cell gave Israeli authorities information about the planning, financing, and execution of this act of terrorism. The two were later convicted of multiple counts of murder and attempted murder. Id.
The plaintiffs here—Jenny Rubin and her mother, Deborah Rubin; Stuart Hersh and his wife, Renay Frym; Noam Rozenman and his parents, Elena and Tzvi Rozenman; Daniel Miller; and Abraham Mendelson—are American citizens who were grievously wounded in the September 4, 1997 bombing or suffered severe emotional and loss-of-companionship injuries as a result of being closely related to those who were physically hurt. These victims filed suit against Iran in federal district court in Washington, D.C., alleging that Iran was responsible for the bombings as a result of the training and support it had provided to Hamas. Id. Jurisdiction was predicated on
At this point the plaintiffs faced a problem familiar to Iran‘s judgment creditors: They had won a significant judgment but enforcement options were limited. A nationwide search for attachable Iranian assets eventually led to Chicago and its rich collection of ancient artifacts housed in the city‘s major museums. The plaintiffs registered their judgment with the United States District Court for the Northern District of Illinois and served the University of Chicago‘s Oriental Institute and later the Field Museum of Natural History with a Citation to Discover Assets pursuant to
The first two are collections of Persian antiquities recovered in excavations in the Iranian city of Persepolis in the 1930s and on the Chogha Mish plain in southwestern Iran in the 1960s. Archaeologists from the University of Chicago led these excavations, and Iran loaned the artifacts to the Oriental Institute for long-term study and to decipher the Elamite writing that appears on some of the tablets included among the discoveries. The terms of the academic loan require the Oriental Institute to return the collections to Iran when study is complete. The Institute says it has finished studying the Chogha Mish Collection and is ready to return it to Iran pending resolution of a claim before the Iran-United States Claims Tribunal in the Hague.4 Study of the Persepolis Collection is apparently ongoing, although the Institute says it has returned parts of this collection to Iran.
The third group of artifacts is known as the Herzfeld Collection, after the German archaeologist Ernst Herzfeld who worked on excavations in Persia for 30 years in the early twentieth century. See Wikipedia, Ernst Herzfeld, http://en.wikipedia.org/wiki/Ernst_Herzfeld (last visited Mar. 10, 2011). The Field Museum purchased a set of prehistoric pottery, metalworks, and ornaments from Herzfeld in 1945. The plaintiffs contest the Field Museum‘s title;
they claim that Iran owns this collection because Herzfeld stole the artifacts and smuggled them out of the country in the 1920s and 1930s. Iran, however, does not claim ownership of the Herzfeld Collection.
The plaintiffs alleged that these three collections are subject to attachment under two provisions in the FSIA: (1) the exception to
The plaintiffs moved for partial summary judgment, asking the court to hold that
Instead of taking an immediate appeal, the museums asked the court to certify the order for appeal under
After Iran made its appearance, the plaintiffs served it with a request for production of documents under
Iran sought a protective order shielding it from these discovery requests and also moved for summary judgment seeking a declaration that the Persepolis, Chogha Mish, and Herzfeld Collections are immune from execution and attachment under the FSIA. The plaintiffs countered with a motion under
The magistrate judge eventually granted the plaintiffs’
The plaintiffs interpreted these rulings as compelling Iran to comply in full with all their discovery and deposition requests under
Of course, general-asset discovery was precisely what the plaintiffs were seeking and indeed what the magistrate judge had ordered. His order plainly stated that “Iran will comply with [the plaintiffs‘] requests for general asset discovery[,]” and this holding was the focal point of Iran‘s objection before the district court. In a motion to reconsider, the plaintiffs noted the district judge‘s error. The judge then acknowledged the oversight and issued a one-page order compelling Iran to submit to the plaintiffs’ requests for general-asset discovery. Iran appealed under the collateral-order doctrine and also sought review of the district court‘s earlier order declaring that
II. Discussion
A. Appellate Jurisdiction
Before we address the merits, there is a threshold question about appellate jurisdiction—two questions, actually, because two interlocutory orders have been appealed: (1) the district court‘s general-asset discovery order; and (2) the court‘s earlier order rejecting
It is well-established that “as a general rule, an order authorizing discovery in aid of execution of judgment is not appealable until the end of the case.” In re Joint E. & S. Dists. Asbestos Litig., 22 F.3d 755, 760 (7th Cir.1994). However, the order at issue here invades Iran‘s sovereign immunity, and it is equally well-established that orders denying claims of immunity may be immediately appealed under the collateral-order doctrine. Mitchell v. Forsyth, 472 U.S. 511, 530 (1985); Nixon v. Fitzgerald, 457 U.S. 731, 742-43 (1982); Empress Casino v. Blagojevich, 638 F.3d 519, 527-28 (7th Cir.2011). This includes interlocutory orders denying claims of sovereign immunity under the FSIA. Rush-Presbyterian-St. Luke‘s Med. Ctr. v. Hellenic Republic, 877 F.2d 574, 576 n. 2 (7th Cir.1989); Segni v. Commercial Office of Spain, 816 F.2d 344, 347 (7th Cir.1987).
The question of appellate jurisdiction over the court‘s earlier order is trickier. That order, too, had the effect of denying a claim of attachment immunity under the FSIA. The district court held that
But orders immediately appealable under the collateral-order doctrine are “final decisions” under
In Weir v. Propst, 915 F.2d 283, 285 (7th Cir.1990), we “clarif[ied] the relationship between the collateral-order doctrine and section 1292(b) certification in the recurrent setting of appeals from denial of immunity.” We explained that a
We reiterated this point in Otis, although in somewhat more sweeping terms: “[A] litigant entitled to appeal under the collateral order doctrine must act within 30 days and if this time expires without appeal must wait until the final judgment to pursue the issue.” 29 F.3d at 1167. This passage in Otis relied on Weir and should be read with the earlier opinion. The failure to timely appeal an immunity order under the collateral-order doctrine does not necessarily postpone review until the end of the case; it postpones review until another appealable order is entered. This will usually be the final judgment, but not always. And here, there is “another appealable order,” Weir, 915 F.2d at 286, not the final judgment, that has provided the next opportunity for review. The district court‘s general-asset discovery order rejected Iran‘s claim of sovereign immunity, and Iran‘s timely appeal of that order permits review of the earlier—and closely related—immunity decision.7
This conclusion finds support in decisions from the Third and Fifth Circuits. See In re Montgomery County, 215 F.3d 367, 372 (3d Cir.2000) (quoting Weir‘s statement that when a collateral order is not timely appealed, “[t]he defendant must then wait until another appealable order
(normally, the final judgment) is entered, upon appeal of which he can challenge any interlocutory order that has not become moot“); Kenyatta v. Moore, 744 F.2d 1179, 1186-87 (5th Cir.1984) (interlocutory appeal that is not timely pursued can be revived upon entry of final judgment or some other appealable order); but cf. Mille Lacs Band of Chippewa Indians v. Minnesota, 48 F.3d 373, 375 (8th Cir.1995) (deciding not to review earlier orders of the district court—whether or not they fell within the collateral-order doctrine—on interlocutory review of a later injunction because the earlier orders were not timely appealed and were not inextricably linked to the injunction issue that was properly before the court).
Moreover, in the particular circumstances of this case, permitting review of the first immunity order as part of Iran‘s appeal from the second reflects sound appellate management, not an unwarranted expansion of the scope of collateral-order review. Both orders raise important and closely related questions regarding the scope and operation of the FSIA. Questions of foreign-sovereign immunity are sensitive, and lower-court mistakes about the availability of immunity can have foreign-policy implications. More particularly here, the district court‘s refusal to consider
B. Attachment Immunity Under § 1609 of the FSIA
On the merits this appeal challenges the district court‘s interpretation of the FSIA. Our review is de novo. Autotech Techs. LP v. Integral Research & Dev. Corp., 499 F.3d 737, 749 (7th Cir.2007).
The FSIA was enacted in 1976, but the doctrine of foreign-sovereign immunity developed at common law very early in our nation‘s history. Samantar v. Yousuf, 560 U.S. 305, 130 S.Ct. 2278, 2284 (2010); Republic of the Philippines v. Pimentel, 553 U.S. 851, 865 (2008); Republic of Austria v. Altmann, 541 U.S. 677, 688-89 (2004). “For more than a century and a half, the United States generally granted foreign sovereigns complete immunity from suit in the courts of this country.” Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486 (1983). Chief Justice
district court refused to consider the question of
9. The Supreme Court‘s recent decision in Ortiz v. Jordan, 562 U.S. 180, 131 S.Ct. 884 (2011), does not affect our conclusion. The issue in Ortiz was whether the denial of a motion for summary judgment based on qualified immunity could be appealed following a full trial on the merits. Id. at 888-89. The Supreme Court said “no.” Id. at 893. The denial of a motion for summary judgment based on qualified immunity may be immediately appealed under Mitchell v. Forsyth, subject to the limitations of Johnson v. Jones, 515 U.S. 304 (1995); alternatively, the defense may be renewed and litigated at trial. The Court held in Ortiz that the failure to take an immediate appeal of the denial of immunity on summary judgment precludes review of that order following a trial on the merits; to obtain review of an immunity claim in that situation, the defendant must preserve it at trial in a motion for judgment as a matter of law under
Marshall‘s opinion in The Schooner Exchange v. McFaddon, 7 Cranch 116, 3 L.Ed. 287 (1812), articulated the general principle, and “[a]lthough the narrow holding of The Schooner Exchange was only that the courts of the United States lack jurisdiction over an armed ship of a foreign state found in our port, that opinion came to be regarded as extending virtual absolute immunity to foreign sovereigns.” Verlinden, 461 U.S. at 486. The doctrine “is premised upon the ‘perfect equality and absolute independence of sovereigns, and th[e] common interest in impelling them to mutual intercourse.‘” Pimentel, 553 U.S. at 865 (quoting Schooner Exchange, 7 Cranch at 137); see also Nat‘l City Bank of N.Y. v. Republic of China, 348 U.S. 356, 362 (1955) (Foreign-sovereign immunity is based on “reciprocal self-interest [] and respect for the ‘power and dignity’ of the foreign sovereign.“).
Foreign-sovereign immunity “is a matter of grace and comity on the part of the United States,” not a constitutional doctrine. Verlinden, 461 U.S. at 486. Accordingly, federal courts
In practice the State Department would usually request immunity in all actions against friendly foreign sovereigns. Samantar, 130 S.Ct. at 2285; Verlinden, 461 U.S. at 486. That changed in 1952 when the State Department adopted a new “restrictive” theory of foreign-sovereign immunity. Samantar, 130 S.Ct. at 2285; Verlinden, 461 U.S. at 486. The “Tate Letter” (Jack B. Tate, Acting Legal Advisor to the Department of State, writing to the Attorney General) announced that foreign-sovereign immunity would thenceforward be “confined to suits involving the foreign sovereign‘s public acts, and [would] not extend to cases arising out of a foreign state‘s strictly commercial acts.” Verlinden, 461 U.S. at 487.
This policy shift was not codified into law, and its implementation gave rise to some practical and political difficulties as the State Department struggled to maintain a consistent standard for evaluating grants of immunity for foreign sovereigns. Samantar, 130 S.Ct. at 2285; Altmann, 541 U.S. at 690-91; Verlinden, 461 U.S. at 487. In 1976 Congress passed the FSIA for the purpose of providing a clear, uniform set of standards to govern foreign-sovereign immunity determinations. Under the FSIA, courts, not the State Department, decide claims of foreign-sovereign immunity according to the principles set forth in the statute. See
For the most part, the FSIA codified the restrictive theory of sovereign immunity announced in the Tate Letter. Samantar, 130 S.Ct. at 2285; Altmann, 541 U.S. at 691; Verlinden, 461 U.S. at 488. The Act contains two primary forms of immunity. Section 1604 provides jurisdictional immunity from suit: “[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States” except as otherwise provided in the Act.
Subject to existing international agreements to which the United States is a party at the time of enactment of this Act the property in the United States of a foreign state shall be immune from
attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter.
In keeping with the restrictive theory of foreign-sovereign immunity, the FSIA carves out certain exceptions to the jurisdictional immunity of foreign states described in
In their underlying suit against Iran, the plaintiffs established jurisdiction via
(a) The property in the United States of a foreign state . . . used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State . . . if—
. . .
(7) the judgment relates to a claim for which the foreign state is not immune under section 1605A, regardless of whether the property is or was involved with the act upon which the claim is based.
The district court did not address the applicability of either of these exceptions. Instead, the court held that the attachment immunity conferred by
1. The general-asset discovery order
Execution proceedings are governed by
As a general matter, it is widely recognized that the FSIA‘s immunity provisions aim to protect foreign sovereigns from the burdens of litigation, including the cost and aggravation of discovery. See Pimentel, 553 U.S. at 865; Dole Food Co. v. Patrickson, 538 U.S. 468, 479 (2003); Rush-Presbyterian, 877 F.2d at 576 n. 2; Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 849 (5th Cir.2000); Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 449 (D.C.Cir.1990). This is consistent with the Supreme Court‘s treatment of other immunities—for example, the qualified immunity of governmental officials. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1953 (2009) (“The basic thrust of the qualified-immunity doctrine is to free officials from the concerns of litigation, including avoidance of disruptive discovery.” (quotation marks omitted)). A potential difficulty arises, however, when an asserted exception to immunity turns on disputed facts. The FSIA does not directly address the extent to which a judgment creditor may pursue discovery to establish that the property he is seeking to attach fits within one of the statutory exceptions to the attachment immunity conferred by
In Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528 (5th Cir.1992), the Fifth Circuit aptly took note of the “tension between permitting discovery to substantiate exceptions to statutory foreign sovereign immunity and protecting a
sovereign‘s or sovereign agency‘s legitimate claim to immunity from discovery.” Id. at 534. Arriba involved
By inquiring about Iran‘s assets generally, the Plaintiffs, and ultimately the Court, will be able to determine which of those assets fall within the domain of assets that are amenable to attachment and execution under the FSIA and TRIA. The Court will not limit the Plaintiffs’ discovery requests to those categories of assets that are reachable under the FSIA and TRIA, allowing Iran to be the judge of which assets are immune before providing any discovery. That determination goes to the merits of the case and will be made by the Court alone.
Rubin v. Islamic Republic of Iran, No. 03 C 9370, 2008 WL 192321, at *15 (N.D.Ill. Jan. 18, 2008). The district judge adopted this reasoning in toto.
This approach is inconsistent with the presumptive immunity of foreign-state property under
Importantly here, the exceptions to attachment immunity are narrower than the exceptions to jurisdictional immunity: “Although there is some overlap between the exceptions to jurisdictional immunity and those for immunity from execution and attachment, there is no escaping the fact that the latter are more narrowly drawn.” Id. We noted in Autotech that “[t]he FSIA says that immunity from execution is waived only for specific ‘property.’ As a result, in order to determine whether immunity from execution or attachment has been waived, the plaintiff must identify specific property upon which it is trying to act.” Id. at 750. Under the FSIA “[t]he only way the court can decide whether it is proper to issue the writ [of attachment or execution] is if it knows which property is targeted.” Id. In other words, “[a] court cannot give a party a blank check when a foreign sovereign is involved.” Id.
As our discussion in Autotech makes clear,
Three other circuits have addressed the question of discovery in the context of attachment proceedings against foreign-state property in the United States under the FSIA, and all have agreed that the court must proceed narrowly, in a manner that respects the statutory presumption of immunity and focuses on the specific property alleged to be exempt. The Second, Fifth, and Ninth Circuits have repeated an identical message to the district courts: “[D]iscovery should be ordered circumspectly and only to verify allegations of specific facts crucial to an immunity determination.” EM Ltd. v. Republic of Argentina, 473 F.3d 463, 486 (2d Cir.2007) (quoting First City, Texas-Houston, N.A. v. Rafidain Bank, 150 F.3d 172, 176 (2d Cir.1998)); Conn. Bank of Commerce, 309 F.3d at 260 n. 10 (quoting Arriba, 962 F.2d at 534); Af-Cap, Inc. v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080, 1095-96 (9th Cir.2007) (emphasis omitted) (quoting Conn. Bank of Commerce, 309 F.3d at 260 n. 10).11 We agree. Discovery orders that are broad in scope and thin in foundation unjustifiably subject foreign states to unwarranted litigation costs and intrusive inquiries about their American-based assets. One of the purposes of the immunity codi-
The plaintiffs note that these decisions from other circuits took language from Arriba, 962 F.2d at 534, the Fifth Circuit case dealing with exceptions to
The plaintiffs cite two cases as support for the general-asset discovery order. The first is Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468 (9th Cir.1992), which involved a contract dispute between an American company and Beijing Ever Bright Industrial Co., a company controlled by the People‘s Republic of China. The American company won a default judgment against Ever Bright on a breach-of-contract claim and then sought general discovery in order to identify Ever Bright‘s assets; the district court authorized the discovery. Ever Bright appealed and the Ninth Circuit affirmed. Richmark is distinguishable from this case. Ever Bright was an instrumentality of the People‘s Republic of China, and the discovery order at issue in Richmark was limited to Ever Bright‘s assets. As we have noted, the immunity exceptions in the FSIA for property owned by an instrumentality of a foreign state are much broader than the exceptions for property owned by the foreign state itself.12 See
Finally, the plaintiffs lodge a policy objection to restricting discovery to the particular foreign-state property sought to be attached. They maintain that limiting discovery in this way would effectively deny judgment creditors the opportunity to locate potentially attachable assets of the foreign state. This contention merits several responses.
First, it is an exaggeration to suggest that limiting discovery to the specific property identified for attachment completely forecloses the opportunity of judgment creditors to discover any attachable assets of the foreign-state judgment debtor. Targeted discovery regarding specifically identified assets may prove fruitful, and the plaintiff may in the end be permitted to execute on the specified property. It is true that limiting discovery to the specific
property identified for attachment restricts the plaintiff‘s ability to use the coercive power of the court to identify other attachable foreign-state assets, but that is a consequence of the balance struck by the FSIA. Nothing in the statutory scheme prevents judgment creditors from using private means to identify potentially attachable assets of foreign states located in the United States. Moreover, the FSIA includes a provision for judgment creditors in certain cases to enlist the assistance of the Secretary of the Treasury and the Secretary of State in identifying and executing against the assets of a foreign sovereign. Section 1610(f)(2)(A) provides:
At the request of any party in whose favor a judgment has been issued with respect to a claim for which the foreign state is not immune under section 1605(a)(7) (as in effect before the enactment of section 1605A [enacted Jan. 28, 2008]) or section 1605A, the Secretary of the Treasury and the Secretary of State should make every effort to fully, promptly, and effectively assist any judgment creditor or any court that has issued any such judgment in identifying, locating, and executing against the property of that foreign state or any agency or instrumentality of such state.
(Emphasis added.) The plaintiffs secured their judgment against Iran under
There is no question that the attachment immunity codified in
2. The appearance order
The foregoing discussion also highlights the flaws in the district court‘s earlier order in which the court held that attachment immunity under
tachment and execution unless an exception applies; under
Again, we can find helpful analogous principles in the operation of
The district courts shall have original jurisdiction . . . of any . . . action against a foreign state as defined in section 1603(a) of this title as to any claim for relief . . . to which the foreign state is
not entitled to immunity either under sections 1605-1607 of this title or any applicable international agreement.
Though not jurisdictional, the immunity conferred by
This reading of
cution is presumed and waiver of immunity is the exception.17 Section 1610(c) is even more telling. That provision governs the issuance of an attachment order under either
No attachment or execution referred to in subsections (a) and (b) of this section shall be permitted until the court has ordered such attachment and execution after having determined that a reasonable period of time has elapsed following the entry of judgment and the giving of any notice required under section 1608(e) of this chapter [governing service, time to answer, and default].
Our conclusion that the court must address
To date, two circuits have addressed whether the foreign state must appear and assert
We now join these courts in concluding that under
For the foregoing reasons, we REVERSE the district court‘s general-asset discovery order and its earlier order requiring Iran to appear and affirmatively plead
Jon FAULKENBERG, Byron LeMaster, and JF Marketing, LLC, Plaintiffs-Appellants, v. CB TAX FRANCHISE SYSTEMS, LP, Colbert Ball Tax Service, Inc., Al Colbert, and Ja Ja Ball, Defendants-Appellees.
No. 09-1874.
United States Court of Appeals, Seventh Circuit.
Argued Nov. 9, 2009. Decided March 29, 2011.