Case Information

*1 16-1227-cv

Vera v. The Republic

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ______________ August Term (Argued: April Decided: August 2017) Docket No. ‐ ALDO VERA, JR., Personal representative Estate

Aldo Vera, Sr.,

Plaintiff Appellee THE REPUBLIC OF CUBA,

Defendant, BANCO BILBAO VIZCAYA ARGENTARIA, S.A., Appellant.

______________

Before: P OOLER W ESLEY , C ARNEY , Circuit Judges

Appeal an April order judgment civil contempt entered United District Court for Southern District New York (Hellerstein, J. ). District Court held appellant Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”), foreign bank, contempt refusing comply with subpoena requesting information about Cuban assets located inside outside States. Plaintiff Appellee Aldo Vera, Jr. served subpoena on BBVA’s New York branch effort enforce Republic Cuba. BBVA moved quash subpoena, arguing did have jurisdiction served personal bank.

We REVERSE Court’s order REMAND instructions grant BBVA’s motion quash. We conclude enter Foreign Sovereign Immunities Act information subpoena served therefore void.

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R OBERT A. S WIFT Kohn, Swift & Graf, P.C., Philadelphia, PA (Jeffrey E. Glen, Anderson Kill P.C., New York, NY, brief ), Plaintiff ‐ Appellee Aldo Vera, Jr.

K ENNETH A. C ARUSO (Christopher D. Volpe, Matthew L. Nicholson, on 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 International Bankers European Banking Federation Support 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 New York City Bar Association Support Appellant

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W ESLEY Circuit Judge :

At heart appeal by Plaintiff ‐ Appellee Aldo Vera, Jr. (“Vera”) against Republic extrajudicial killing father Vera obtained default Florida court, relying “terrorism exception” sovereign immunity, 1605A(a)(1). then secured default Southern New York (Hellerstein, J .), after granted full faith credit judgment.

This appeal arises efforts by serving information subpoenas New York branches various banks. One *4 bank, Appellant Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”), refused to comply subpoena’s request for information regarding Cuban assets located outside States. BBVA moved to quash subpoena, contending Vera’s against Cuba was void for lack subject matter jurisdiction Foreign Sovereign Immunities Act (the “FSIA”), amended, §§ et seq. and District Court lacked personal jurisdiction needed to compel worldwide discovery. Court rejected BBVA’s jurisdictional challenges ordered provide full complete answers Vera’s request information, holding bank contempt when refused comply.

We reverse. lacked subject matter jurisdiction Vera’s because Cuba was designated sponsor terrorism time Vera’s father was killed, Vera failed establish was later designated terrorism result father’s death. Accordingly, FSIA’s sovereign immunity—the only potential basis case— does apply. was immune action, enter it, information subpoena void.

I father, Aldo Vera, Sr., killed San Juan,

Puerto Rico October brought *5 civil Cuba in Florida court on behalf his father’s estate. Vera alleged that his father—the former police chief in Havana—fled in 1960s engaged in counterrevolutionary activities in Puerto Rico Florida. He further alleged that agents acting orders Cuban government executed Vera’s father in a street in San Juan, as he was leaving a regularly scheduled meeting prominent anti ‐ communist group. did appear in Florida action. 2008,

after holding bench trial merits, Florida entered favor approximately $95 million. Although foreign states are generally immune courts under FSIA, held was suit statutory immunity then found U.S.C. § 1605(a)(7). That exception, often referred “terrorism exception,” explicitly authorizes suits foreign states certain acts terrorism, such extrajudicial killings torture. See § 1605A(a)(1). To invoke exception, must have been “designated a state sponsor of terrorism the time the act . . . occurred” later, “as a result of such act.” Id . § 1605A(a)(2)(A)(i)(I). Florida court held that FSIA’s terrorism applied to Vera’s suit. Specifically, found that

Cuba ordered extrajudicial killing father in in retaliation for his participation in anti ‐ communist movement and Cuba “was designated be a in . . . and remains so designated.” J.A. 273. In Florida court’s view, those facts rendered Cuba suit any court United States and established right relief.

Armed judgment, Vera filed complaint against Cuba Southern New York, seeking “recognition and entry” Florida pursuant Full Faith Credit Act, 1738. J.A. 282. Vera alleged he entitled federal Cuba based strength Florida judgment, which, according Vera, rested all necessary findings fact. particular, alleged found agents shot killed father San Juan “was designated ‘State Sponsor Terrorism’ . remains so designated.” J.A. failed appear action. On August entered approximately $45 million, *7 including interest. The District Court stated had subject matter jurisdiction over claim “pursuant to U.S.C. §[§] and et seq .,” and Florida judgment was entitled to full faith and credit. J.A. 286.

With hand, Vera sought collect Cuban assets wherever held. He commenced an execution attachment proceeding District Court served information subpoenas New York branches various foreign banks, seeking information regarding Cuba’s assets both inside outside States. See Fed. R. Civ. P. 69(a)(2); N.Y. C.P.L.R. 5224(a). BBVA, one garnishee banks, supplied information pertaining Cuban assets located its New York branch, but refused produce information regarding Cuban assets found outside New York.

Vera moved compel BBVA’s compliance request information, BBVA cross moved quash subpoena. According BBVA, subpoena was void ab initio because Court lacked jurisdiction over action served. Cuba, argued, because sovereign immunity FSIA—the only possible basis Cuba—did apply. *8 BBVA also argued personal therefore could compel BBVA produce information regarding Cuban assets located outside States.

While motion compel BBVA’s cross ‐ motion quash were pending, U.S. Marshals levied writs execution against Cuban assets held at New York branches various banks. filed omnibus petition turnover assets, naming other foreign banks third party defendants proceeding. U.S.C. § 1610(g)(1) (“[T]he property foreign state against judgment is entered [§ 1605A or § 1605(a)(7)] . . . attachment aid execution, execution, upon judgment provided this section . . .”); N.Y. C.P.L.R. 5225(b) (authorizing creditor commence special proceeding against garnishee who holds assets debtor) answered and moved dismiss the special proceeding lack jurisdiction the FSIA. The District Court construed BBVA’s argument as collateral attack the Florida and denied the motion, reasoning, as relevant here, Florida court held trial merits “made appropriate jurisdictional findings,” including finding “Cuba designated as either before [Vera’s father’s killing] partially as result th[at] act.” Vera Republic , F. Supp. 3d 367, (S.D.N.Y. 2014). This finding, concluded, “satisfied criteria 1605(a)(7) (now § 1605A), established Florida [court] . had jurisdiction over Cuba.” Id.

Shortly thereafter, Court denied BBVA’s motion quash granted motion compel BBVA’s compliance with information subpoena, ordering bank “provide full complete answers respect Republic Cuba’s assets located [BBVA’s] branches outside of, well inside, States.” Vera Banco Bilbao Vizcaya Argentaria (S.A.) No. Civ. U.S. Dist. LEXIS 187222, at *6 (S.D.N.Y. Sept. 2014). rejected BBVA’s argument concerning jurisdiction same reason previously denied BBVA’s motion dismiss turnover proceeding—namely, already made appropriate findings support exercise Cuba. id. at *7; see also F. Supp. 3d at also concluded had personal bank. Id. *8–9. District Court subsequently denied BBVA’s motion for reconsideration granted petition for turnover assets. See Vera v. Republic , 91 F. Supp. 3d 561, 564, 573 (S.D.N.Y. 2015). ^[5] BBVA declined produce further information compliance with subpoena, prompting District hold contempt. This appeal followed.

II issue before us concerns enforceability

information subpoena Vera served BBVA effort execute Cuba. BBVA argues subpoena is void unenforceable because served personal BBVA necessary compel worldwide discovery. *11 Although challenges validity subpoena on both grounds, we resolve appeal on first, see Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp. , 549 U.S. 422, 431 (2007), reviewing Court’s legal conclusions regarding subject matter jurisdiction FSIA de novo its factual findings clear error, see re Terrorist Attacks Sept. 11, , 714 F.3d 109, (2d Cir. 2013). For reasons follow, we hold matter jurisdiction action against therefore had no power enter it. Accordingly, subpoena served is void.

A

Two principles federal jurisdiction guide our analysis. First, “functions a restriction power.” Ins. Corp. Ir., Ltd. Compagnie des Bauxites de Guinee , U.S. (1982). Federal courts may proceed at all any cause without it. See Sinochem U.S. at 430–31. Second, “the subpoena power court cannot be more extensive than its jurisdiction.” U.S. Catholic Conference Abortion Rights Mobilization, Inc. U.S. (1988). A district must therefore determine whether has jurisdiction, no how case comes before it. If lacks proceeding issues subpoena does aid determining jurisdiction, subpoena void unenforceable. id.

These principles are particularly important sovereign. “By reason its *12 authority foreign commerce foreign relations, Congress has the undisputed power decide, as of federal law, whether under what circumstances foreign nations should be amenable suit United States.” Verlinden B.V. v. Cent. Bank of Nig. , 461 U.S. 480, 493 (1983). Congress exercised authority when enacted Foreign Sovereign Immunities Act 1976, Pub. L. No. 94 583, 90 Stat. 2891 (codified as amended at 28 U.S.C. §§ 1330, 1391(f), 1441(d), 1602–11), comprehensively regulates amenability foreign nations suit United States. ^[7] FSIA declares “a foreign state shall be

immune courts States except provided sections 1605 1607 chapter.” 28 U.S.C § 1604. If one enumerated exceptions applies, foreign liable, federal court, “in same manner same extent private individual like circumstances.” Id. § If no applies, no U.S. has hear claim. See id. § 1604; Verlinden , 461 U.S. at 489, 493–94. addition FSIA’s substantive provisions, provides “sole basis obtaining

jurisdiction” district claims state. Saudi Arabia Nelson U.S. (1993) *13 (quoting Argentine Republic Amerada Hess Shipping Corp. , 488 U.S. 443 (1989)). Section 1330 states the “district courts shall have original jurisdiction . . . any nonjury civil action against foreign state . to any claim relief in personam with respect to foreign state is entitled to immunity either under [28 U.S.C. §§ 1605–07] under any applicable international agreement.” 28 1330(a) (emphasis added).

Section thus “work[s] in tandem” FSIA’s substantive provisions: Section bars federal courts exercising jurisdiction when foreign is entitled to immunity, section confers federal district courts only if one exceptions immunity applies. Argentine Republic , U.S. at 434. “At threshold every in [d]istrict [c]ourt state, therefore, must satisfy itself one exceptions applies—and doing so must apply detailed federal law standards set forth [FSIA].” Verlinden U.S. at 493–94. If fails undertake analysis determine itself an applies, has no authority hear claim. See id. at

B

Because subpoena issue appeal served effort judgment, legitimacy subpoena tied Court’s enter one exceptions sovereign immunity FSIA. Bank Markazi Peterson S. Ct. *14 n.1 (2016) (jurisdiction foreign state exists only an exception sovereign immunity in FSIA); U.S. Catholic Conference U.S. at (subpoena is void if district subject in underlying action). only exception urged in case is for state ‐

sponsored acts of terrorism. § 1605A. That exception eliminates sovereign immunity permits suits directly against foreign state any case money damages are sought

[the] foreign state personal injury or death was caused by an act torture, extrajudicial killing, aircraft sabotage, hostage taking, or provision material support or resources such act if . . . engaged by an official, employee, or agent such foreign state while acting within scope or her office, employment, or agency.

Id. § 1605A(a)(1). Even if foreign state has engaged one terrorist acts described above, however, it suit unless was “designated terrorism time act . occurred” later “so designated result such act.” Id. 1605A(a)(2)(A)(i)(I) (emphasis added). asserted had pursuant FSIA. Yet did make any findings would support application *15 exception. Instead, the District Court adopted the Florida court’s determination that the terrorism applied, without independently assessing Cuba’s immunity from suit. Court’s view, the Florida court found “that Cuba was designated as a state sponsor terrorism either before . . . or partially as a result [Vera’s father’s death],” resolved threshold question whether had Vera’s claim. F. Supp. 3d 376. That was error two reasons.

First, Florida court did not find that was designated a state sponsor terrorism “either before . . . partially a result” father’s death, as section 1605A requires. Id. only findings Florida court made regarding Cuba’s terrorist designation were “was designated be a state sponsor terrorism . remains so designated.” J.A. Those findings do not satisfy terrorism exception.

Second, even if Florida court had found designated result father’s death, would not be bound by jurisdictional finding. Jerez Republic Cuba, F.3d (D.C. Cir. 2014) (jurisdictional determinations made are not entitled res judicata effect if defendant did not “actually appear[]” proceedings); Am. Steel Bldg. Co. Davidson & Richardson Constr. Co. F.2d (11th Cir. 1988) (“[W]here defendant does appear, by default, court does preclude reviewing jurisdictional issues.”). Notwithstanding fact “held trial . on the merits,” , F. Supp. 3d at 371, the jurisdictional facts necessary to eliminate Cuba’s sovereign immunity under the FSIA were not fully fairly litigated in action. Florida court’s jurisdictional findings, such they were, neither bind the District Court subsequent suit nor can they be relied on by the parties. Underwriters Nat’l Assurance Co. N.C. Life & Accident & Health Ins. Guar. Ass’n , U.S. (1982); cf. Transaero, Inc. La Fuerza Aerea Boliviana F.3d (2d Cir. 1998) (jurisdictional determinations should not be considered preclusive when made upon grant judgment). District Court thus erred doubly relying Florida court’s findings fact basis its jurisdiction: did not make findings necessary render suit FSIA and, even if had, those findings would bind aid Court, was required analyze record independently determine if was immune. By failing make factual inquiry, did fulfill its obligation “apply detailed law standards set forth [FSIA]” order “satisfy itself one exceptions [to immunity] applies.” Verlinden U.S. Had engaged proper analysis, only conclusion could have reached record immune suit.

2 order to invoke terrorism of

FSIA, Vera had burden to establish that was designated a state sponsor of terrorism as a result of his father’s death. City of New York Permanent Mission of India to Nations F.3d (2d Cir. 2006) (explaining burden of proof on party seeking establish court’s jurisdiction). only evidence submitted link Cuba’s terrorist designation extrajudicial killing of his father, however, consisted of a single expert affidavit a professor of Cuban American studies, who opined Cuba’s eventual designation state sponsor of terrorism was “based, least part, on extrajudicial killings tortures.” J.A. 474. According Vera’s expert, “given notoriety [Vera’s father], his stature among Cuban exile community, press coverage assassination generated,” his death likely one “260 acts violence” by Cuban government between ultimately influenced State Department’s decision designate sponsor terrorism. J.A. But expert cited no evidence support conclusion specifically link Cuba’s terrorist designation father’s death. record suggests State Department designated terrorism generally because its

“support revolutionary violence groups [that] use policy instrument.” J.A. (excerpt Regulation Changes on Exports: Hearing Before Subcomm. Near E. & S. Asian Affairs S. Comm. Foreign Relations 97th Cong. (1982) (statement Ernest *18 Johnston, Jr., Deputy Assistant Sec’y for Econ. Affairs, Dep’t of State)). For example, State Department’s bulletin designating Cuba of terrorism, introduced into evidence, indicates that Cuba’s terrorist designation derived from country’s support for groups like M ‐ that have “repeatedly engaged kidnappings, bombings, hostage ‐ taking, aircraft hijacking.” Id. A contemporaneous State Department message Congress reinforces that view. See J.A. 314–19 (excerpt of Role of Int’l Terrorism & Subversion: Hearing Before Subcomm. Sec. & Terrorism of S. Comm. Judiciary 97th Cong. 143–45 (1982) (testimony of Ambassador Thomas O. Enders, Assistant Sec’y of State Inter Am. Affairs, Dep’t State)) (describing specific examples Cuba’s “promotion violent revolution Latin America”). legislative materials statements by government officials submitted case make no mention extrajudicial killings or death Vera’s father.

Because record contains no evidence specifically links Cuba’s terrorist designation father’s death, Vera failed meet burden establish applies. In absence statutory exception, was jurisdictionally immune suit. § 1604; Bank Markazi S. Ct. n.1.

*19 The D.C. Circuit reached similar conclusion in Jerez The plaintiff in that case won default judgment in Florida state court under the terrorism exception the FSIA, based on allegations that the Cuban government tortured him in the 1960s and 1970s. Jerez F.3d at 421. plaintiff then sued the United States District Court for the Southern District Florida, granted full faith and credit the Florida and awarded the plaintiff $200 million damages. Id. plaintiff registered the federal the for the Columbia, but that court refused vacated plaintiff’s writs attachment. Id. 421–22. It held both Florida district FSIA, rendering their judgments void. Id. at

On appeal, D.C. Circuit reviewed jurisdictional basis Cuba’s immunity de novo affirmed district court’s conclusion exception did not apply. Id. 424–25. Relying on same Congressional testimony introduced case, D.C. Circuit held “Cuba designated [of terrorism] because torture inflicted [the plaintiff], but because support acts father. Furthermore, because did meet burden show statutory applies, case presents no relevant unanswered factual issues regarding existence jurisdiction, unnecessary remand jurisdictional question. *20 international terrorism such those committed by the terrorist group M ‐ 19.” Id. (internal quotation marks omitted). As a result, the D.C. Circuit concluded that “no statutory exception to sovereign immunity the FSIA applie[d].” Id. Both the Florida state court initially granted judgment and Florida district gave full faith credit state judgment lacked subject matter jurisdiction. Their “default judgments [were] therefore void.” Id.

Although our case arises a somewhat different procedural context, we agree with reasoning conclusion Jerez State Department did not designate a sponsor terrorism until 1982—six years after Vera’s father was killed—and record before us fails establish was designated terrorism result Vera’s father’s death. Accordingly, exception FSIA, only potential basis subject matter jurisdiction this case, does not apply. was immune Vera’s action, Court lacked enter it, subpoena issued invalid void.

C

Faced the evidence Cuba’s immunity under FSIA, proposes two alternative sources jurisdiction claim. First, he contends seeking recognition a under Full Faith and Credit Act presents question arising under laws United and establishes question U.S.C. § 1331(a). But Full Faith and Credit Act, which requires court judgments receive same credit, validity, effect every other court States, 1738, has no bearing question whether district has hear claim. Minnesota N. Sec. Co. U.S. (1904) (concluding Full Faith Credit Clause does “ha[ve] any bearing whatever” upon questions jurisdiction). It “merely provides standard be used . proceedings already has jurisdiction.” Hazen Research, Inc. Omega Minerals, Inc. F.2d n.1 (5th Cir. 1974).

As Supreme has said Full Faith Credit Act its constitutional counterpart,

While they make record judgment, rendered after due notice one state, conclusive evidence courts another judgment. Our analysis ends there—as Court’s should have.

state, or of United States, of adjudged, they do not affect jurisdiction, either of court which judgment is rendered, or court is offered evidence. Wisconsin v. Pelican Ins. Co. , 127 U.S. 265, 292 (1888), overruled part on other grounds by Milwaukee Cty. v. M.E. White Co. , 296 U.S. 268, 278 (1935).

Thus, an attempt obtain a federal judgment based strength a court not a case arising Constitution, laws, or treaties would trigger federal question jurisdiction. Thompson v. Thompson , U.S. 174, 182 (1988) (“[T]he Full Faith Credit Clause, either its constitutional or statutory incarnations, does give rise implied federal cause action.”); see also Miccosukee Tribe Indians Fla. v. Kraus Anderson Constr. Co. , F.3d 1268, (11th Cir. 2010) (The Full Faith Credit Act “does . confer a federal district domesticate rendered by another jurisdiction.”); Rogers Platt F.2d (D.C. Cir. 1987) (“[N]either constitutional full faith credit clause nor statutory implementing provisions provides predicate federal jurisdiction.”). If were otherwise, “any attempt, any time or place, by any person, provisions any statute would be, without more, jurisdiction.” California ex rel. McColgan Bruce F.2d (9th Cir. 1942).

Second, contends had subject matter jurisdiction over proceedings judgment pursuant Terrorism Risk Insurance Act 2002 (the “TRIA”), Pub. L. No. 107 297, 116 Stat. 2322, (codified § 1610 note). TRIA provides courts jurisdiction over post ‐ judgment execution attachment proceedings against property a foreign “in every case which a person has obtained a judgment against a terrorist party a claim based upon act terrorism, or a terrorist party is not immune section 1605A 1605(a)(7).” TRIA 201(a).

That provision grants execution attachment proceedings, however, only if “a valid has been entered against [the] foreign sovereign.” Weinstein Islamic Republic Iran F.3d (2d Cir. 2010) (emphasis added); see also Kirschenbaum Fifth Ave. & Related Props. F.3d (2d Cir. 2016) (“[W]here a valid has been entered foreign state, state’s property immune attachment execution unless statutory applies.” (emphasis added)). For reasons already discussed, has entered valid Cuba. Therefore, TRIA did provide proper basis subsequent proceedings execute Court’s judgment.

III

Because action Cuba, subpoena served entered is void. Court’s order is reversed, with costs, case remanded instructions grant BBVA’s motion quash.

[1] Congress repealed § 1605(a)(7) replaced § 1605A. National Defense Authorization Act Fiscal Year Pub. L. No. § 1083, Stat. 3, 338–44 (2008). For purposes appeal, is immaterial statutory version supported underlying judgments. language relevant our analysis is essentially identical each. We cite 1605A because version effect time commenced action.

[2] excluded its portion awarded punitive damages, because FSIA prohibits award punitive damages state.

[3] Although U.S. Treasury Department blocks transmission Cuban funds by federally chartered clearing banks New York, s ee C.F.R. § 515.201 FSIA allows creditors foreign attach blocked funds constitute property its instrumentalities, see 1610(g).

[4] omnibus petition included claims by two other sets plaintiffs seeking collect unrelated judgments Cuba. Those claims were consolidated before administrative purposes but are issue appeal.

[5] BBVA separately appealed Court’s order granting petition for turnover assets held BBVA’s New York branch well its order denying BBVA’s motion for stay turnover proceeding pending resolution appeal. BBVA’s appeal from order denying its motion stay currently pending before our Court.

[6] BBVA initially appealed Court’s orders directing comply subpoena denying reconsideration, but we dismissed those appeals non final orders lack appellate jurisdiction. Vera Republic F. App’x (2d Cir. 2016); Republic F.3d (2d Cir. 2015).

[7] Mobil Cerro Negro, Ltd. Bolivarian Republic Venezuela No. 15–707, U.S. App. LEXIS *13–19 (2d Cir. July 2017), detailed history FSIA.

[8] light our conclusion, we have no need address BBVA’s arguments was proper “claimant” 1605A responsible extrajudicial killing

[9] We need consider collateral attack resolve appeal. BBVA’s principal argument—an argument we agree—is action Cuba. absence statutory sovereign immunity, did have adjudicatory authority entertain cause seeking recognition entry