ALDO VERA, Jr., as Personal representative of the Estate of Aldo Vera, Sr., Plaintiff-Appellee, v. THE REPUBLIC OF CUBA, Defendant, BANCO BILBAO VIZCAYA ARGENTARIA, S.A., Appellant.
Docket No. 16-1227
United States Court of Appeals, Second Circuit
August 14, 2017
August Term 2016. Argued: April 18, 2017.
V. State- and City-Law Claims
The district court declined to exercise supplemental jurisdiction over the non-federal claims because it had dismissed Shultz‘s federal claims. Because we hold that Shultz did state a plausible claim of discriminatory termination, and interference with her FMLA rights, the District Court should reconsider on remand its decision to deсline to exercise supplemental jurisdiction. See Irrera v. Humpherys, 859 F.3d 196, 199 n.5 (2d Cir. 2017). Of course we intimate no view on the merits of any such reconsideration.
CONCLUSION
For the reasons stated above, the judgment of the district court is VACATED, and REMANDED for further proceedings, insofar as it dismissed Shultz‘s claims for discriminatory termination in violation of Title VII and interference with her exercise of FMLA rights, and declined to exercise supplemental jurisdiction over her claims under New York State- and City-law. The judgment is AFFIRMED in all other respects.
KENNETH A. CARUSO (Christopher D. Volрe, Matthew L. Nicholson, on the brief), White & Case LLP, New York, NY, for Appellant Banco Bilbao Vizcaya Argentaria, S.A.
John J. Clarke, Jr., Richard F. Hans, Kevin Walsh, DLA Piper LLP, New York, NY, for Amici Curiae Institute of International Bankers and European Banking Federation in Support of Appellant.
James L. Kerr, Margaret E. Tahyar, Michael S. Flynn, Alicia Llosa Chang, Caroline Stern, Davis Polk & Wardwell LLP, New York, NY, for Amicus Curiae Banking Law Committee of the New York City Bar Association in Support of Appellant.
Before: POOLER, WESLEY, and CARNEY, Circuit Judges.
WESLEY, Circuit Judge:
At the heart of this appeal is an action by Plaintiff-Appellee Aldo Vera, Jr. (“Vera“) against the Republic of Cuba fоr the extrajudicial killing of his father in 1976. In 2008, Vera obtained a default judgment against Cuba in Florida state court, relying on the “terrorism exception” to sovereign immunity,
This appeal arises from Vera‘s efforts to enforce the federal default judgment by serving information subpoenas on the New York branches of various foreign banks. One bank, Appellant Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA“), refused to comply with the subpоena‘s request for information regarding Cuban assets located outside the United States. BBVA moved to quash the subpoena, contending that Vera‘s federal default judgment against Cuba was void for lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act of 1976 (the “FSIA“), as amended,
We reverse. The District Court lacked subject matter jurisdiction over Vera‘s ac-
I
Vera‘s father, Aldo Vera, Sr., was killed in San Juan, Puerto Rico on October 25, 1976. In 2001, Vera brought a civil action against Cuba in Florida state court on behalf of his father‘s estate. Vera alleged that his father—the former police chief in Havana—fled Cuba in the 1960s and engaged in counterrevolutionary activities in Puerto Rico and Florida. He further alleged that agents acting on orders of the Cuban government executed Vera‘s father in a street in San Juan, as he was leaving a regularly scheduled meeting of a prominent anti-communist group.
Cubа did not appear in the Florida action. In 2008, after holding a bench trial on the merits, the Florida court entered a default judgment in Vera‘s favor for approximately $95 million. Although foreign states are generally immune from the jurisdiction of the courts of the United States under the FSIA, the Florida court held that Cuba was subject to suit under a statutory exception to immunity then found in
The Florida court held that the FSIA‘s terrorism exception applied to Vera‘s suit. Specifically, it found that Cuba ordered the extrajudicial killing of Vera‘s father in 1976 in retaliation for his participation in the anti-communist movement and that Cuba “was designated to be a state sponsor of terrorism in 1982 ... and remains so designated.” J.A. 273. In the Florida court‘s view, those facts rendered Cuba subject to suit in any court in the United States аnd established Vera‘s right to relief.
Armed with the state court judgment, Vera filed a complaint against Cuba in the United States District Court for the Southern District of New York, seeking “recognition and entry” of the Florida judgment pursuant to the Full Faith and Credit Act,
Cuba failed to apрear in the federal action. On August 17, 2012, the District Court entered a default judgment against it for approximately $45 million, including interest.2 The District Court stated it had subject matter jurisdiction over Vera‘s claim “pursuant to
With a federal default judgment in hand, Vera sought to collect Cuban assets wherever held. He commenced an execution and attachment proceeding in the District Court and served information subpoenas on the New York branches of various foreign banks, seeking information regarding Cuba‘s assets both inside and outside the United States. Sеe
Vera moved to compel BBVA‘s compliance with the request for information, and BBVA cross-moved to quash the subpoena. According to BBVA, the subpoena was void ab initio because the District Court lacked subject matter jurisdiction over the action in which it was served. The District Court lacked jurisdiction over Vera‘s action against Cuba, BBVA argued, because the terrorism exception to sovеreign immunity in the FSIA—the only possible basis for subject matter jurisdiction over Cuba—did not apply. BBVA also argued that the District Court lacked personal jurisdiction over it and therefore could not compel BBVA to produce information regarding Cuban assets located outside the United States.
While Vera‘s motion to compel and BBVA‘s cross-motion to quash were pending, U.S. Marshals levied writs of execution against Cuban assets held at the New York branches of various banks.3 Vera filed an omnibus petition for a turnover of the assets, naming BBVA and other foreign banks as third-party defendants in that procеeding.4 See
BBVA answered and moved to dismiss the special proceeding for lack of subject matter jurisdiction under the FSIA. The District Court construed BBVA‘s argument as a collateral attack on the Florida judgment and denied the motion, reasoning, as relevant here, that the Florida court held a trial on the merits and “made
Shortly thereafter, the District Court denied BBVA‘s motion to quash and granted Vera‘s motion to compel BBVA‘s compliance with the information subpoena, ordering the bank to “provide full and complete answers with respect to the Republic of Cuba‘s assets loсated in [BBVA‘s] branches outside of, as well as inside, the United States.” Vera v. Banco Bilbao Vizcaya Argentaria (S.A.), No. 12 Civ. 1596, 2014 U.S. Dist. LEXIS 187222, at *6 (S.D.N.Y. Sept. 10, 2014). The District Court rejected BBVA‘s argument concerning subject matter jurisdiction for the same reason it previously denied BBVA‘s motion to dismiss the turnover proceeding—namely, that the Florida court already made the appropriate findings to support the exercise of jurisdiction over Cuba. See id. at *7; see also Vera, 40 F.Supp.3d at 376. The District Court also concluded it had personal jurisdiction over the foreign bank. Id. at *8-9.
The District Court subsequently denied BBVA‘s motion for reconsideration and granted Vera‘s petition for a turnover of assets. See Vera v. Republic of Cuba, 91 F.Supp.3d 561, 564, 573 (S.D.N.Y. 2015).5 BBVA declined to produce further information in compliance with the subpoena, prompting the District Court to hold it in contempt. This appeal followed.6
II
The issue before us concerns the enforceability of the information subpoena Vera served on BBVA in an effort to execute his federal default judgment against Cuba. BBVA argues the subpoena is void and unenforceable because the District Court lacked subject matter jurisdiction over the action in which it was served and personal jurisdiction over BBVA necessary to compel worldwide discovery.
Although BBVA challenges thе validity of the subpoena on both grounds, we resolve this appeal on the first, see Sinochem Int‘l Co. Ltd. v. Malaysia Int‘l Shipping Corp., 549 U.S. 422, 431 (2007), reviewing the District Court‘s legal conclusions regarding subject matter jurisdiction under the FSIA de novo and its factual findings for clear error, see In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 109, 113 (2d Cir. 2013). For the reasons that follow, we hold that the District Court lacked subject matter jurisdiction over Vera‘s action against Cuba and therefore had no power to enter judgment against it. Accordingly, the subpoena served to enforce that judgment is void.
A
Two principles of federal jurisdiction guide our analysis. First, subject
These principles are particularly important in an action against a foreign sovereign. “By reason оf its authority over foreign commerce and foreign relations, Congress has the undisputed power to decide, as a matter of federal law, whether and under what circumstances foreign nations should be amenable to suit in the United States.” Verlinden B.V. v. Cent. Bank of Nig., 461 U.S. 480, 493 (1983). Congress exercised that authority when it enacted the Foreign Sovereign Immunities Act of 1976, Pub. L. No. 94-583, 90 Stat. 2891 (codified as amended at
The FSIA declares that “a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States exceрt as provided in sections 1605 to 1607 of this chapter.”
In addition to the FSIA‘s substantive provisions,
Section 1330 thus “work[s] in tandem” with the FSIA‘s substantive provisions: Section 1604 bars state and federal courts from exercising jurisdiction when a foreign state is entitled to immunity, and section 1330 confers jurisdiction on federal district courts only if one of the exceptions to immunity applies. Argentine Republic, 488 U.S. at 434. “At the threshold of every action in a [d]istrict [c]ourt against a foreign state, therefore, the court must satisfy itself that one of the exceptions applies—and in doing so it must apply the detailed federal law standards set forth in the [FSIA].” Verlinden, 461
B
Because the subpoena at issue in this appeal was served on BBVA in an effort to enforce Vera‘s federal default judgment, the legitimacy of the subpoena is tied to the District Court‘s jurisdiction to enter judgment against Cuba under one of the exceptions to sovereign immunity in the FSIA. See Bank Markazi v. Peterson, 136 S.Ct. 1310, 1317 n.1 (2016) (jurisdiction over foreign state exists only under an exception to sovereign immunity in the FSIA); U.S. Catholic Conference, 487 U.S. at 80 (subpoena is void if district court lacked subject matter jurisdiction in underlying action).
The only exception urged in this case is for state-sponsored acts of terrorism. See
in which money damages are sought against [the] foreign state for personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources for such an act if ... engaged in by an official, employee, or agent of such foreign state while acting within the scope of his or her office, employment, or agency.
Id.
1
The District Court asserted that it had subject matter jurisdiction over Vera‘s action against Cuba pursuant to the terrorism exception of the FSIA. Yet it did not make any findings that would support the application of that exceрtion. Instead, the District Court adopted the Florida court‘s determination that the terrorism exception applied, without independently assessing Cuba‘s immunity from suit. In the District Court‘s view, the Florida court found “that Cuba was designated as a state sponsor of terrorism either before ... or partially as a result of [Vera‘s father‘s death],” and resolved the threshold question of whether the District Court had jurisdiction over Vera‘s claim. Vera, 40 F.Supp.3d at 376. That was error for two reasons.
First, the Florida court did not find that Cuba was designated a state sponsor of terrorism “either before ... or partially as a result” of Vera‘s father‘s death, as section 1605A requires. Id. The only findings the Florida court made regarding Cuba‘s terrorist designation were that Cuba “was designated to be a state sponsor of terrorism in 1982 ... and remains so designated.” J.A. 273. Those findings do not satisfy the terrorism exception.
Second, even if the Florida court had found that Cuba was designated a state sponsor of terrorism as a result of Vera‘s father‘s death, the District Court would not be bound by that jurisdictional finding. See Jerez v. Republic of Cuba, 775 F.3d 419, 422 (D.C. Cir. 2014) (jurisdictional determinations made in a default judgment are not entitled to res judicata effect if the defendant did not “actually appear[]” in the proceedings); Am. Steel Bldg. Co. v.
The District Court thus erred doubly in relying on the Florida court‘s findings of fact as the basis for its jurisdiction: the Florida court did not make the findings necessary to render Cuba subject to suit under the terrorism exception of the FSIA and, even if it had, those findings would not bind or aid the District Court, which was required to analyze the record independently to determine if Cuba was immune. By failing to make that factual inquiry, the District Court did not fulfill its obligation to “apply the detailed federal law standards set forth in the [FSIA]” in order to “satisfy itself that one of the exceptions [to immunity] applies.” Verlinden, 461 U.S. at 494. Had the District Court engaged in the proper analysis, the only conclusion it сould have reached on this record is that Cuba was immune from Vera‘s suit.
2
In order to invoke the terrorism exception of the FSIA, Vera had the burden to establish that Cuba was designated a state sponsor of terrorism in 1982 as a result of his father‘s death. See City of New York v. Permanent Mission of India to the United Nations, 446 F.3d 365, 369 (2d Cir. 2006) (explaining that the burden of proof is on the party seeking to establish the court‘s jurisdiction). The only evidence Vera submitted to link Cuba‘s terrorist designation to the extrajudicial killing of his father, however, consisted of a single expert affidavit from a professor of Cuban-American studies, who opined that Cuba‘s eventual designation as a state sponsor of terrorism was “based, at least in part, on extrajudicial killings and tortures.” J.A. 474. According to Vera‘s expert, “given the notoriety of [Vera‘s father], his stature among the Cuban exile community, and the press coverage his assassination generated,” his death was likely one of “260 acts of violence” by the Cuban government between 1975 and 1982 that ultimately influenced the State Department‘s decision to designate Cuba a state sponsor of terrorism. J.A. 476. But Vera‘s expert cited no evidence to support that conclusion or specifically link Cuba‘s terrorist designation to Vera‘s father‘s death.
The record suggests the State Department designated Cuba a state sponsor of terrorism generally because of its “support for revolutionary violence and groups [that] use terrorism as a policy instrument.” J.A. 347 (excerpt of Regulation Changes on Exports: Hearing Before the Subcomm. on Near E. & S. Asian Affairs of the S. Comm. on Foreign Relations, 97th Cong. 13 (1982) (statement of Ernest Johnston, Jr., Deputy Assistant Sec‘y for Econ. Affairs, Dep‘t of State)).
Because the record contains no evidence that specifically links Cuba‘s terrorist designation to Vera‘s father‘s death, Vera failed to meet his burden to establish that the terrorism exception applies. In the absence of a statutory exception, Cuba was jurisdictionally immune from Vera‘s suit. See
The D.C. Circuit reached a similar conclusion in Jerez. The plaintiff in that case won a default judgment against Cuba in Florida state court under the terrorism exception of the FSIA, based on allegations that the Cuban government tortured him in the 1960s and 1970s. Jerez, 775 F.3d at 421. The plaintiff then sued Cuba in the United States District Court for the Southern District of Florida, which granted full faith and credit to the Florida judgment and awarded the plaintiff over $200 million in damages. Id. The plaintiff registered the federal judgment in the United States District Court for the District of Columbia, but that court refused to enforce the judgment and vacated the plaintiff‘s writs of attachment. Id. 421-22. It held that both the Florida state court and the federal district court in Florida lacked subject matter jurisdiction under the FSIA, rendering their default judgments void. Id. at 422.
On appeal, the D.C. Circuit reviewed the jurisdictional basis for Cuba‘s immunity de novo and affirmed the district court‘s conclusion that the terrorism exception did not apply. Id. at 423, 424-25. Relying on the same Congressional testimony BBVA introduced in this case, the D.C. Circuit held that “Cuba was designated a state sponsor [of terrorism] not because of the torture inflicted on [the plaintiff], but because of support for acts of international terrorism such as those committed by the terrorist group M-19.” Id. at 425 (internal quotation marks omitted). As a result, the D.C. Circuit concluded that “no statutory exception to sovereign immunity under the FSIA applie[d].” Id. Both the Florida state court that initially granted the default judgment and the Florida district court that gave full faith and credit to the state court judgment lacked subject matter jurisdiction. Their “default judgments [were] therefore void.” Id.
C
Faced with the evidence of Cuba‘s immunity under the FSIA, Vera proposes two alternative sources of subject matter jurisdiction over his claim.
First, he contends that an action seeking recognition of a foreign judgment under the Full Faith and Credit Act presents a question arising under the laws of the United Statеs and establishes federal question jurisdiction under
As the Supreme Court has said of the Full Faith and Credit Act and its constitutional counterpart,
While they make the record of a judgment, rendered after due notice in one state, conclusive evidence in the courts of another state, or of the United States, of the matter adjudged, they do not affect the jurisdiction, either of the court in which the judgment is rendered, or of the court in which it is offered in evidence.
Wisconsin v. Pelican Ins. Co., 127 U.S. 265, 292 (1888), overruled in part on other grounds by Milwaukee Cty. v. M.E. White Co., 296 U.S. 268, 278 (1935).
Thus, an attempt to obtain a federal judgment based on the strength of a state court judgment is not a case arising under the Constitution, laws, or treaties of the United States that would trigger federal question jurisdiction. See Thompson v. Thompson, 484 U.S. 174, 182 (1988) (“[T]he Full Faith and Credit Clause, in either its constitutionаl or statutory incarnations, does not give rise to an implied federal cause of action.“); see also Miccosukee Tribe of Indians of Fla. v. Kraus-Anderson Constr. Co., 607 F.3d 1268, 1276 (11th Cir. 2010) (The Full Faith and Credit Act “does not
Second, Vera contends that the District Court had subject matter jurisdiction over the proceedings to enforce the federal default judgment pursuant to the Terrorism Risk Insurance Act of 2002 (the “TRIA“), Pub. L. No. 107-297, 116 Stat. 2322, 2337 (codified at
That provision grants jurisdiction over execution and attachment proceedings, however, only if “a valid judgment has been entered against [the] foreign sovereign.” Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 48 (2d Cir. 2010) (emphasis added); see also Kirschenbaum v. 650 Fifth Ave. & Related Props., 830 F.3d 107, 123 (2d Cir. 2016) (“[W]here a valid judgment has been entered against a foreign state, the foreign state‘s United States property is immune from attachment and execution unless a statutory exception applies.” (emphasis added)). For the reasons already discussed, the District Court has not entered a valid judgment against Cuba. Therefore, the TRIA did not provide a proper basis for subject matter jurisdiction оver subsequent proceedings to execute the District Court‘s judgment.
III
Because the District Court lacked subject matter jurisdiction over Vera‘s action against Cuba, the subpoena served on BBVA to enforce the judgment entered in that action is void. The District Court‘s order is reversed, with costs, and the case is remanded with instructions to grant BBVA‘s motion to quash.