811 F. Supp. 2d 841 | S.D.N.Y. | 2011
OPINION AND ORDER
I. INTRODUCTION
This suit arises out of the death of Daniel Wultz, and the injuries of Yekutiel Wultz, suffered in a 2006 suicide bombing in Tel Aviv, Israel. Four members of the Wultz family bring this suit against Bank of China (“BOC”), alleging acts of interna
II. BACKGROUND
On April 17, 2006, the Palestinian Islamic Jihad (“PIJ”) carried out a suicide bombing in Tel Aviv, Israel,
The PIJ, a radical terrorist organization founded in the Gaza Strip in the early 1980s,
The American-imposed sanctions regime seeks to “prevent PIJ from conducting banking activities and thereby limit its ability to plan, prepare and [] carry out terrorist attacks.”
In April 2005, Israeli security officers informed Chinese security and bank officials of exactly why the PIJ transfers were being made and of the impact the transfers had on the PIJ’s terrorist activities.
The Wultz family originally filed suit in the U.S. District Court for the District of Columbia, against the Islamic Republic of Iran and several of its leaders, the Syrian Arabic Republic and several of its leaders, as well as BOC.
III. APPLICABLE LAW
A. Waiver
When a party assumes in its briefs that a particular jurisdiction’s law applies, it gives “ ‘implied consent [... ] sufficient to establish choice of law,’ ”
B. Conflict of Laws
When exercising supplemental jurisdiction over state law claims, federal courts follow the choice of law rules of the forum state to determine the controlling substantive law.
C. Choice of Law
To resolve conflicts in tort cases, New York applies an “interest analysis” to identify the jurisdiction that has the greatest interest in the litigation based on the occurrences within each jurisdiction, or
contacts of the parties with each jurisdiction, that “ ‘relate to the purpose of the particular law in conflict.’ ”
Congress has articulated the United States’ strong interest in compensating American victims of terrorism.
“Congress has explicitly granted private parties the right to pursue common [law] tort claims against terrorist organizations and those that provide material support or financing to terrorist organizations .... [P]rivate tort actions directed at compensating victims of terrorism and thwarting the financing of terrorism vindicate the national and international public interest.”51
Additionally, when a bank’s conduct is challenged, that bank’s corporate domicile, or at least the location where its allegedly tortious acts took place, also has a keen interest in applying its laws.
IV. DISCUSSION
A. BOC Has Not Waived Its Right to Argue for the Application of New York Law
Plaintiffs argue that because BOC did not dispute the application of Israeli law in its motion to dismiss, BOC has waived its right to argue for the application of New York law. This contention misstates BOC’s position in its brief. BOC wrote:
The FAC does not explain why the Plaintiffs chose to allege statutory causes of action under Israeli law, rather than bringing this case under the law of the domicile (Florida) or the law of this District, where they chose to file the action. However, this choice is of no*849 moment because the law of Israel, which is conceptually similar to U.S. common law standards of duty, forseeability[,] and causation, forecloses all of Plaintiffs’ Israeli law claims.54
Thus, while BOC noted that plaintiffs’ choice of law was curious, it elected to argue that the claims should be dismissed under any jurisdiction’s law. Subsequently, the D.C. District Court recognized that at least one of plaintiffs’ claims was a “unique” cause of action
B. A Substantive Conflict Exists Between New York and Israeli Law
With respect to each of plaintiffs’ non-federal claims, there exists a substantive conflict of laws. While neither party formally disputes the conflict’s existence,
1. Negligence
The basic elements of negligence are the same under New York and Israeli law.
2. Breach of Statutory Duty and Vicarious Liability
A choice of law analysis is required when a party relies upon “a number of provisions of [foreign] substantive law that are potentially decisive and that have no New York law equivalent.”
should be distinguished from ordinary joint and several liability as well as from vicarious liability of an employer or principal for the actions of his employee or agent, which are dealt with elsewhere in the CWO.... Although plaintiffs caption their claim under § 12 as one for “vicarious liability,” liability of a defendant under § 12 is unique: “there is no prerequisite that the other person, which actually inflicted the loss, be personally liable for the commission of a tort.”64
As such, both the breach of statutory duty and vicarious liability claims rely exclusively on unique foreign laws and therefore trigger a choice-of-law inquiry.
C. Lex Loci Delicti Compels the Court to Apply Israeli Law
Before I can turn to an interest analysis, I must determine whether conduct-regulating, as opposed to loss-allocating, rules are at issue. Negligence and breach of statutory duty are unmistakably claims that implicate the appropriate standard of conduct and are thus conduct-regulating rules. The third cause of action, arising under section 12 of the Israeli CWO and labeled “vicarious liability,” is a closer question. At first blush, it sounds like a classic loss-allocation rule. However, because that Act holds liable “a person who participates in, assists, advises or solicits an act or omission, committed or about to be committed by another person, or who orders, or authorizes such an act or omission,”
Because conduct-regulating rules are at stake, I will begin my analysis with the place of the tort. The last event necessary to make BOC liable took place in Israel. While the bank’s acts likely occurred in China and New York, BOC would not be before this Court had the PIJ not committed a terrorist attack in Tel Aviv. Thus, because this case arises out of personal injury, I place significant emphasis on the lex loci delicti which is Israel.
In undertaking an interest analysis, many factors point toward the application of American, specifically New York, law. First, BOC has relied upon the laws of China and New York in conducting its affairs; it has never sought to do any business in Israel.
Conversely, other factors point toward the application of Israeli law. First, because the attack took place in Tel Aviv, Israel also has an interest in combating domestic terrorism and ensuring that terrorists operating within its borders do not have easy access to financial resources. Second, many, if not most, of the attack’s victims were Israeli citizens and the property damage occurred on Israeli soil.
In evaluating the competing interests, meaningful considerations favor all of the choices — New York, Florida, and Israel.
Application of foreign law here is not “violative of fundamental notions of justice or prevailing concepts of good morals.”
V. CONCLUSION
For the foregoing reasons, defendant’s motion to apply New York law is denied. The parties are instructed to brief the Construction of Foreign Law Motion. Plaintiffs, as moving party, should submit their brief within twenty-eight (28) days of this Order. BOC’s response is due twenty-one (21) days later and plaintiffs’ reply will be due fourteen (14) days after that.
SO ORDERED.
. See 18 U.S.C. § 2333.
. See First Amended Complaint ("FAC”) ¶¶ 1-2.
. See id. ¶ 3.
. See id.
. See id. ¶ 85.
. See id. ¶ 26.
. Id. ¶ 27.
. See id. ¶¶ 28-30.
. See id. ¶ 31.
. See id. ¶ 63.
. IdA 64.
. See id. ¶ 68.
. See id. ¶ 69.
. Id.
. See id.
. See id. ¶ 74.
. See id. ¶¶ 74, 77.
. See id. ¶ 77.
. See id.
. Id.
. Id. ¶ 80.
. See id.
. See generally FAC.
. See Wultz v. Islamic Republic of Iran, 755 F.Supp.2d 1 (D.D.C.2010).
. See Wultz v. Islamic Republic of Iran, 762 F.Supp.2d 18, 20 (D.D.C.2011).
. See Transcript of 4/04/11 Conference ("4/04/11 Tr.”), at 7, 36.
. Santalucia v. Sebright Transp., Inc., 232 F.3d 293, 296 (2d Cir.2000) (quoting Tehran-Berkeley Civil & Envtl. Eng’rs v. Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239, 242 (2d Cir.1989)) ("[I]mplied consent to use a forum's law is sufficient to establish choice of law....”). Accord International Bus. Mach. Corp. v. Liberty Mut. Fire Ins. Co., 303 F.3d 419, 423 (2d Cir.2002); Bluestein & Sander v. Chicago Ins. Co., 276 F.3d 119, 121-22 (2d Cir.2002); Larsen v. AC. Carpenter, Inc., 620 F.Supp. 1084, 1103 (E.D.N.Y.1985), aff'd, 800 F.2d 1128 (2d Cir.1986).
. Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d Cir.1984).
. See Santalucia, 232 F.3d 293 (finding waiver when adjudicating fee dispute after the settlement of an underlying suit); Tehran-Berkeley Civil & Envtl. Eng’rs, 888 F.2d 239 (finding waiver on appeal for the second time); International Bus. Mach. Corp., 303 F.3d 419 (finding waiver during appeal from summary judgment); Bluestein & Sander, 276 F.3d 119 (finding waiver during appeal from summary judgment); Larsen, 620 F.Supp. 1084 (finding waiver in bench trial opinion). The same principle is found in the cases cited by plaintiffs. See, e.g., CSX Transp., Inc. v. Commercial Union Ins. Co., 82 F.3d 478 (D.C.Cir.1996) (finding waiver during appeal from summary judgment); Muslin v. Frelinghuysen Livestock Managers, Inc., 777 F.2d 1230, 1231 n. 1 (7th Cir.1985) (finding waiver at a "late point in this litigation”); Farm Credit Bank of Texas v. Fireman’s Fund Ins. Co., 822 F.Supp. 1251, 1258 (W.D.La.1993), aff’d, 50 F.3d 1033 (5th Cir.1995) (finding waiver on summary judgment).
. See Booking v. General Star Mgmt. Co., 254 F.3d 414, 418 (2d Cir.2001) ("The courts of appeals generally do not consider arguments
. Id.
. See Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir.1989) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)).
. Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir.2001) (quoting Curley v. AMR Corp., 153 F.3d 5, 11 (2d Cir.1998)).
. International Bus. Mach. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir.2004).
. GlobalNet Financial.Com v. Frank Crystal & Co., 449 F.3d 377, 384 (2d Cir.2006) (quoting Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189, 197, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985)). Accord Finance One Pub. Co. v. Lehman Bros. Special Fin., Inc., 414 F.3d 325, 337 (2d Cir.2005) (citation omitted) (explaining that the interest analysis is a “flexible approach intended to give controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation”).
. GlobalNet Financial.Com, 449 F.3d at 384 (quotation marks and citations omitted).
. Padula v. Lilam Props. Corp., 84 N.Y.2d 519, 522, 620 N.Y.S.2d 310, 644 N.E.2d 1001 (1994).
. Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72, 595 N.Y.S.2d 919, 612 N.E.2d 277 (1993).
. HSA Residential Mortg. Servs. of Texas v. Casuccio, 350 F.Supp.2d 352, 364 (E.D.N.Y.2003) (citing Schultz, 65 N.Y.2d at 195, 491 N.Y.S.2d 90, 480 N.E.2d 679).
. Id.
. Cf. In re Sept. 11th Litig., 494 F.Supp.2d 232, 239 (S.D.N.Y.2007) (quoting Pescatore v. Pan Am. World Airways, Inc., 97 F.3d 1, 13 (2d Cir.1996)) ("For claims arising out of a 'disaster befalling a plane aloft,' however, 'the place of the crash is often random or, as here, fixed by a warped mind,' and thus legitimate reasons to deviate from the lex loci delicti rule may exist.”). To be sure, a case arising out of an act of terror involving an airplane presents an especially strong case for a departure from last-event necessary, given that the place of the crash may be random. In contrast, a terrorist bombing such as the one at issue in the instant litigation may be "fixed by a warped mind,” but it was nevertheless specifically chosen and was not in any way random.
. See LaSala v. TSB Bank, PLC, 514 F.Supp.2d 447, 465-66 (S.D.N.Y.2007) (“A situation such as this, where the alleged misconduct occurred in one jurisdiction, but because of the international nature of a company’s business dealings the harm caused by that misconduct was felt in another country, presents precisely the sort of circumstance where a blind adherence to the rule that the last place determines the locus of the tort and therefore the jurisdiction with the greatest interest would result in the jurisdiction which does not possess the greatest interest being deemed so for choice[-]of[-]law purposes.").
. Campbell v. Goodyear Tire & Rubber Co., No. 83 Civ. 6282, 1985 WL 1514, at *1 (S.D.N.Y. June 3, 1985) (quoting Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698, 699, 405 N.Y.S.2d 441, 376 N.E.2d 914 (1978)).
. Curley, 153 F.3d at 12 (citing Brink's Ltd. v. South African Airways, 93 F.3d 1022, 1031 (2d Cir.1996)).
. Hamilton v. Accu-Tek, 47 F.Supp.2d 330, 337 (E.D.N.Y.1999).
. Kirschenbaum v. Islamic Republic of Iran, 572 F.Supp.2d 200, 210 (D.D.C.2008).
. Strauss v. Credit Lyonnais, S.A., 249 F.R.D. 429, 443-44 (E.D.N.Y.2008).
. See, e.g., In re Sept. 11th Litig., 494 F.Supp.2d at 240 (“Several thousand New Yorkers were killed, and billions of dollars of New York property was destroyed. New York, rather than the several domiciles of the passengers on board Flights 11 and 175, or of the defendants who were sued in connection with their involvement in those flights, has the greatest interest in applying its conduct-regulating law.”); In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 230 F.Supp.2d 376, 390-91 (S.D.N.Y.2002) (“[N]ot only is Austria the locus of the tort,
. See Oveissi v. Islamic Republic of Iran, 573 F.3d 835, 842-43 (D.C.Cir.2009) ("But [the victim] was not an American national; nor has the plaintiff suggested that the defendants knew Oveissi had an American grandchild or that the United States or its nationals were in any other way the object of the attack.”).
. See Weiss v. National Westminster Bank, PLC, 242 F.R.D. 33, 50 (E.D.N.Y.2007).
. Estates of Ungar ex rel. Strachman v. Palestinian Auth., 715 F.Supp.2d 253, 268 (D.R.I.2010) (quoting Weiss, 242 F.R.D. at 50).
. See Sussman v. Bank of Israel, 801 F.Supp. 1068, 1075 (S.D.N.Y.1992), aff’d, 990 F.2d 71 (2d Cir.1993) ("[P]laintiffs challenge the integrity of the [defendants’, including the Bank of Israel’s,] conduct. That conduct took place in Israel. Whether or not defendants' conduct was tortious will be measured by the law of Israel. It is that law upon which the parties, plaintiffs and defendants alike, relied in respect of defendants' conduct; and the interest of Israel in applying its law to admonish or prevent similar conduct in the future assumes a critical and, in my opinion, controlling importance in choice of law analysis.”); LaSala, 514 F.Supp.2d at 465-66 ("Switzerland’s interest in regulating the conduct of banks within its borders, particularly where the bank is a leading financial services provider in the country, is great. The reputability of the country's banking system is intimately connected to the effectiveness of the country's regulation of its banks.”).
. See Wyatt v. Syrian Arab Republic, 398 F.Supp.2d 131, 145 (D.D.C.2005), aff'd, 266 Fed.Appx. 1 (D.C.Cir.2008) ("Though the actual abduction took place in Turkey, the plaintiffs also seek recovery for injuries suffered by the family members of Wyatt and Wilson, including emotional distress and damages for consortium and solatium as a result of their kidnaping, injuries which the plaintiffs suffered while in the United States.”).
. Defendant’s Memorandum of Points and Authorities in Support of Defendant Bank of China Limited's Motion to Dismiss the FAC, at 30.
. See Wultz, 755 F.Supp.2d at 80 (“Although plaintiffs caption their claim under [Israel’s Civil Wrongs Ordinance (“CWO”) ] § 12 as one for 'vicarious liability,’ liability of a defendant under § 12 is unique____").
. See generally 4/04/11 Tr.
. BOC contends that plaintiffs cannot recover under any set of laws, but for the purposes of this motion, assumes the existence of an “arguable conflict." See Memorandum in Support of Bank of China’s Motion Concerning the Choice of Law Governing Plaintiffs’ Non-Federal Claims ("Def. Mem.”), at 3-7.
. See Licci v. American Exp. Bank Ltd., 704 F.Supp.2d 403, 409 (S.D.N.Y.2010) ("[N]o actual conflict exists between the applicable substantive law of negligence in New York and Israel.").
. See In re Terrorist Attacks on Sept. 11, 2001, 349 F.Supp.2d 765, 830 (S.D.N.Y.2005), on reconsideration in part, 392 F.Supp.2d 539 (S.D.N.Y.2005), aff'd, 538 F.3d 71 (2d Cir.2008) ("Banks do not owe non-customers a duty to protect them from the intentional torts of their customers."). See also Burnett v. Al Baraka Inv. & Dev. Corp., 274 F.Supp.2d 86, 109 (D.U.C.2003) ("Plaintiffs offer no support, and we have found none, for the proposition that a bank is liable for injuries done with money that passes through its hands in the form of deposits, withdrawals, check clearing services, or any other routine banking service.”); Century Bus. Credit Corp. v. North Fork Bank, 246 A.D.2d 395, 668 N.Y.S.2d 18, 19 (1st Dep’t 1998) ("[T]o hold that banks owe a duty to their depositors’ creditors to monitor the depositors’ financial activities so as to assure the creditors’ collection of the depositors' debts would be to unreasonably expand banks' orbit of duty.”).
.See Affidavit of Robert J. Tolchin, Submitted in Elmaliach v. Bank of China, Ex. A to Declaration of Mitchell R. Berger (“Berger Decl.”), ¶ 20 (quoting C.A. 906801 Ayalon Insurance Co. Ltd. v. The Executor of the Estate of Haya Ofelger, 59(2) P.D. 349) (“[T]he trend in Israeli law insofar as pertains to the duty of care imposed on the banks is an expansive trend ... and in certain cases, the Court has , recognized the tortious liability of a bank based on the tort of negligence, also to third parties who are not the bank's customers .... According to these standards, the bank is subject to.the duty of foreseeing that its negligence would cause damage to a third party,
.In the parallel state action brought by Israeli victims of the same attack, the New York Supreme Court recently held that "the specific allegations regarding BOC's actual knowledge of Shurafa's terrorist activities sufficiently distinguishes the Complaints herein from the pleading in Lied and takes it outside the usual rule that '[blanks do not owe non-customers a duty to protect them from intentional torts committed by their customers.' " Elmaliach v. Bank of China, Ltd., No. 102026/09 (quoting Lied, 704 F.Supp.2d at 410). Plaintiffs use this passage to argue that there is no longer a substantive conflict-of-laws. While Elmaliach certainly bolsters plaintiffs’ case, I cannot conclude, on the basis of one decision by the lowest state court, that relevant Israeli and New York laws are in harmony.
. Finance One Pub. Co. Ltd., 414 F.3d at 332.
. See FAC ¶¶ 141-152. See also Wultz, 755 F.Supp.2d at 79 ("The elements of Israel's [breach of statutory duty tort] are clear. They include the violation of duty imposed by an Israeli enactment, including Israeli penal laws, not any other nation['s] penal laws.”).
. Wultz, 755 F.Supp.2d at 80 (quoting Israel Galid, Liability for Damage Caused by Others Under Israeli Law, in Unification of Tort Law: Liability for Damage Caused by Others 139, 142-43 (J. Spier ed., 2003)).
. FAC ¶ 155.
. See Plaintiffs' Memorandum in Opposition to Bank of China’s Motion Concerning the Choice of Law Governing Plaintiffs' Non-Federal Claims, at 5-7. Aiding and abetting claims appear most often in the context of
.Alternately, if the Court were to compare the elements of common-law aiding and abetting with CWO § 12, it could still find the existence of at least an arguable conflict. Compare Khulumani v. Barclay Nat. Bank Ltd., 504 F.3d 254, 287-88 (2d Cir.2007), aff'd sub nom. American Isuzu Motors, Inc. v. Ntsebeza, 553 U.S. 1028, 128 S.Ct. 2424, 171 L.Ed.2d 225 (2008) (requiring that an aiding- and-abetting defendant "substantially assist the principal violation”), with Wultz, 755 F.Supp.2d at 80 ("Indeed, mere negligent provision of assistance to a wrongdoer has been sufficient [to] establish such liability [under CWO § 12].”). See also King v. George Schonberg & Co., 233 A.D.2d 242, 650 N.Y.S.2d 107, 108 (1st Dep’t 1996) ("[T]he silence of the [defendant] did not amount to the substantial assistance that is a required element of aider or abettor liability [under New York law].”).
. See, e.g., About Us, Bank of China, http:// www.boc.cn/en/aboutboc/. See also FAC ¶ 24 ("[BOC] is a corporation organized under the laws of the People’s Republic of China (“PRC”) and headquartered in the PRC. Defendant BOC has branches in California and New York, does extensive business throughout the United States and holds significant assets in the United States.”); Def. Mem. at 15 (stating that BOC "has no branch, and does not business” in Israel). Indeed, this fact is undisputed.
. See FAC ¶ 69.
. This factor, however, points just as strongly toward the application of Florida law, where the plaintiffs are domiciled.
. See FAC ¶¶ 137, 149. This factor also favors the application of Florida law at least as much as it favors the application of New York law.
. See Elmaliach, No. 102026/09 (outlining action by families of Israeli victims).
. BOC contends that Americans were also targeted, supporting that proposition with citations to parts of the FAC which essentially allege that China, via BOC and the PIJ, targeted Israel to “undermine an ally of the United States.” See Def. Mem. at 20 (quoting FAC ¶ 112). This contention is wholly conclusory without any factual support.
. See Transcript of 3/08/11 Hearing in Elmaliach, Ex. D. to Burger Deck, at 21:21-22.
. 07/13/11 Letter to the Court, 2. However, plaintiffs' assertions aside, the question of whether plaintiffs will be able to recover under a particular set of laws remains unsettled. In addition, whether the bank had actual knowledge is a hotly contested issue.
. In fact, as the defendant's corporate domicile, China too has an interest in having its law applied.
. Curley, 153 F.3d at 12 (citation omitted).
. Greek Orthodox Patriarchate of Jerusalem v. Christie’s, Inc., No. 98 Civ. 7664, 1999 WL 673347, at *5 (S.D.N.Y. Aug. 30, 1999).