865 F. Supp. 2d 425 | S.D.N.Y. | 2012
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” or “the Bank”), alleging acts of international terrorism and aiding and abetting international terrorism under the Antiterrorism Act
II. BACKGROUND
The facts of this case were laid out in Wultz I and familiarity with them is assumed. In short, the Palestinian Islamic Jihad (“PIJ”) carried out a suicide bombing in Tel Aviv, Israel in 2006, killing Daniel Wultz and severely injuring Yekutiel Wultz, both Florida residents.
Plaintiffs allege that based on the suspicious nature .of the transfers and on warnings that it received from Israeli officials, the Bank “knew or should have known that the PIJ transfers were being made for illegal purposes.”
In order to determine whether plaintiffs’ non-federal claims could survive, I instructed the parties to submit “a motion on whether Israeli law or New York law applies.”
I found that “meaningful considerations” favored both Israeli and New York law
The plaintiffs in Lied were injured (or were the family members of people injured or killed) by rockets launched by the Lebanese organization Hizballah at targets in northern Israel in July and August of 2006. The Lied plaintiffs sued American Express Bank Ltd. (“AmEx”) and other defendants. Plaintiffs alleged that AmEx, serving as a correspondent bank for the Lebanese Canadian Bank, had facilitated wire transfers on behalf of a Hizballah affiliate and that the transfers had helped fund the rocket attacks. As in this case, Lied presented the question of whether Israeli or New York negligence law should apply to AmEx’s conduct. The Second Circuit held that
[t]he alleged conflict [of law] in this case concerns a conduct-regulating rule: the scope of a bank’s duty to protect third parties against intentional torts committed by the bank’s customers. “ ‘If conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders.’ ” [GlobalNet Financial.Com, Inc. v. Frank Crystal & Co., 449 F.3d 377, 384 (2d Cir.2006) (quoting Cooney v. Osgood Mach. Inc., 81 N.Y.2d 66, 72, 595 N.Y.S.2d 919, 612 N.E.2d 277 (1993)).]
Applying the interest-analysis test, we conclude that New York has the greatest interest in this litigation. All of the challenged conduct undertaken by AmEx occurred in New York, where AmEx is headquartered and where AmEx administers its correspondent banking services. Although the plaintiffs’ injuries occurred in Israel, and Israel is also the plaintiffs’ domicile, those factors do not govern where, as here, the conflict pertains to a conduct-regulating rule. Cf. GlobalNet, 449 F.3d at 384-85. We conclude that New York, not Israel, has the stronger interest in regulating the conduct of New York-based banks operating in New York. See, e.g., [Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 198, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985) ] (noting the “locus jurisdiction’s interests in protecting the reasonable expectations of the parties who relied on it to govern their primary conduct”).15
III. DISCUSSION
The facts of Lied are not identical to those here. As plaintiffs argue,
the essence of the plaintiffs’ allegations against BOC is that BOC in China failed to exercise due care with respect to wire transfers received at a branch in China, thus enabling a customer in Chi*428 na to receive funds from Syria and Iran and transfer it to terrorist operatives in Israel, the West Bank, and the Gaza Strip who used the funds to carry out acts of terrorism in Israel.16
In contrast, in Lied AmEx “was simply a correspondent bank that received funds in New York” from the Lebanese Canadian Bank, followed instructions regarding what to do with those funds, had no contact with the originator or beneficiary of the transfers, “and did nothing at all outside of New York.”
The Bank responds with the following arguments: First, plaintiffs have repeatedly asserted the importance of the Bank’s presence and actions in New York in processing the wire transfers, particularly in their nearly-identical state court action.
In Lied, the Second Circuit held that “[a]lthough the plaintiffs’ injuries occurred in Israel, and Israel is also the plaintiffs’ domicile, those factors do not govern where, as here, the conflict pertains to a conduct-regulating rule.”
My earlier decision to apply Israeli law turned on the notion that “the locus of the tort controls.”
Defendant asserts that plaintiffs’ negligence claims cannot survive under Chinese law,
For the reasons stated above, this Court’s August 3, 2011 ruling is withdrawn. Plaintiffs are instructed to inform the Court, by June 12, 2012, whether briefing on Chinese tort law is necessary.
SO ORDERED.
. See 18 U.S.C. § 2333.
. See Wultz v. Bank of China, Ltd., 811 F.Supp.2d 841 (S.D.N.Y.2011) (Wultz I).
. See Licci v. Lebanese Canadian Bank, 672 F.3d 155 (2d Cir.2012).
. See First Amended Complaint (“FAC”) ¶¶ 1-3.
. See id. ¶ 69.
. See id. See also Plaintiffs’ Memorandum of Law in Response to Order to Show Cause Issued March 6, 2012 ("PL Mem.”) at 4-5 and n. 1.
. See FAC ¶ 74.
. Id.n 74-80.
. See Wultz v. Bank of China, 860 F.Supp.2d 225, 234-35, No. 11 Civ. 1266, 2012 WL 70341, at *6 (S.D.N.Y. Jan. 9, 2012).
. 4/4/11 Conf. Tr. at 35:21-22.
. Memorandum in Support of Bank of China’s Motion Concerning the Choice of Law Governing Plaintiffs’ Non-Federal Claims [Docket No. 111] at 22.
. Wultz I, 811 F.Supp.2d at 852.
. Id. at 852 n. 76.
. Id.
. Licci, 672 F.3d at 157.
. Pl. Mem. at 5-6 (emphasis in original).
. Id. at 6.
. Id. at 8.
. See Reply of Defendant Bank of China Ltd. to Plaintiffs’ Response to Order to Show Cause ("Def. Mem.") at 2 (citing to FAC and to arguments of plaintiffs’ counsel in Elmaliach v. Bank of China, No. 102026/09 (Sup.Ct.N.Y.Co.)).
. See Vishipco Line v. Chase Manhattan Bank, 660 F.2d 854, 860 (2d Cir.1981) (stating that "the law of the forum may be applied ... even though the forum’s choice of law rules would have called for the application of foreign law” when parties did not submit evidence on the substance of foreign law).
. Def. Mem. at 5 (quoting J. Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd., 37 N.Y.2d 220, 227, 371 N.Y.S.2d 892, 333 N.E.2d 168 (1975)).
. Licci, 672 F.3d at 157.
. Pl. Mem. at 7.
. See FAC ¶ 77.
. Id. at 6.
. See Def. Mem. at 3.
. Wultz I, 811 F.Supp.2d at 852.
. In arguing that the location of the injury controls, plaintiffs point to Hunter v. Derby Foods, Inc., 110 F.2d 970 (2d Cir.1940), which explained that ''[t]he fact that the defendant's conduct occurred in New York does not oust the law of Ohio. It sent the food into Ohio, where the harm was done. The case is like that of shooting a firearm across the state line, starting a fire which passes the line, or owning a vicious animal which strays over the line.'' But Hunter and the examples listed therein all involve the direct consequences of the defendants’ actions, with no intervening criminal act by a third party. The Second Circuit in Licci held that the facts are materially different when a bank provides standard banking services to a person who then transports money over international borders and uses it to fund terrorist activities.
. See Def. Mem. at 1.
. Plaintiffs argue that the Bank has ''waived” its right to argue for the application of Chinese law. But the Bank did argue that China has a greater interest than Israel in the litigation and, in light of Licci, the Bank should in any event be permitted to take that position now.
. It would not make sense to simultaneously apply non-Israeli negligence law and Israeli breach of statutory duty law, as plaintiffs’ alternative argument proposes. See PL Mem. at 10; Def. Mem. at 7-10. Because the claims apply to the same facts, doing so would eviscerate the non-Israeli negligence law in favor of Israeli breach of statutory duty law, precisely the outcome that the Second Circuit rejected in Licci.