Leibovitich et al vs Syrian Arab Republic, The et al
Filing
203
MEMORANDUM Opinion and Order: Signed by the Honorable Ruben Castillo on 5/19/2016. Mailed notice (mmy, )
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SHLOMO LEIBOVITCH, et al.,
Plaintiffs,
No.08 C 1939
v.
Chief Judge Rub6n Castillo
ISLAMIC REPUBLIC OF IRAN, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
In this long-running case, Shlomo Leibovitch and several of his family members
("Plaintiffs")
seek to recover
for injuries they suffered as a result ofan act ofterrorism
committed in Israel with the support of the Islamic Republic of Iran and the Iranian Ministry
of
Information ("Defendants"). Presently before the Court are motions to quash filed by non-parties
Bank of Tokyo-Mitsubishi UFJ, Ltd. ("Bank of Tokyo") and BNP Paribas ("Paribas")
(collectively, "the banks"), as well
as
Plaintiffs' post-judgment motions to compel discovery
from these non-party banks. (R. 133, Bank of Tokyo's Mot. to Quash; R. 139, Bank of Tokyo's
Mot. to Quash; R. 149, Paribas' Mot. to Quash; R. 154, Pls.'Mot. to Compel; R. 158, Pls.' Mot.
to Compel.) For the reasons stated below, the banks' motions are granted and Plaintiffs' motions
are denied.
BACKGROUND
Several opinions have been issued in this case as it wound its way up to the U.S. Court
of
Appeals for the Seventh Circuit and back down again. See Leibovitch, et al. v. Islamic Republic
of lran, et aI.,697 F.3d 561 (7th Cir.2012); Leibovitch v. Syrian Arab Republic,25 F. Supp. 3d
l07l (N.D. 111.2014); Leibovitch,
et al. v. Syrian Arab Republic, et a/., No. 08 C 1939, 2011
WL
444762 (l{.D. Ill. Feb.
l,20ll).
The tragic facts underlying the case are repeated here only
briefly.
On June 17,2003, Leibovitch, an Israeli citizen, was driving with several of his family
members along a highway in Jerusalem in an area bordering the West Bank. Leibovitch,69T F.3d
at 562. Their minivan was hit by bullets, tragically killing seven-year-old Noam Leibovitch and
seriously injuring three-year-old Shira Leibovitch. Id. It was later learned that the group
Palestine Islamic Jihad ("PIJ") had carried out the shooting.
/d
Believing that the group had
connections to the Iranian government, Plaintiffs filed this suit against Defendants pursuant to
the Antiterrorism Act ("ATA"), 18 U.S.C. $ 2333, and the state-sponsored terrorism exception
contained in the Foreign Sovereign Immunities Act ("FSIA"),28 U.S.C. $ 16054. Id. at 562-63.
A default was entered after Defendants were served through diplomatic channels but failed to
appear.
Id. at 562. Based on the evidence submitted by Plaintiffs, the Court held Defendants
vicariously liable for Plaintiffs' injuries after finding that they had "openly provided material
support and resources for the PIJ's campaign of extrajudicial killings." Id. Ultimately, default
judgment was entered in favor of Plaintiffs totaling nearly $67 million for the physical and
emotional injuries they suffered as a result of the attack. (R. 74, Judgment; R. 107, Am.
Judgment.)
In an effort to collect on their judgment, Plaintiffs recently served discovery requests and
citations to discover assets on Bank of Tokyo and Paribas. (See R. 154, Pls.' Mot. to Compel; R.
158, Pls.' Mot. to Compel.) Bank of Tokyo is a Japanese bank headquartered in Tokyo. (R. 168,
Cunningham Decl. fl'fl 2-4.) It has approximately 700 branches in Japan and 7 5 branches located
in 40 other countries; it has a total of 11 branches and offices in the United States, including a
branch in Chicago, Illinois. (Id.) Its Chicago branch services only a limited number of corporate
customers with offices in the Midwestern United States. (R. 142, Cunningham Suppl. Decl. fl 5.)
The branch has approximately 70 employees, which represents a small percentage of its 35,000
total employees; the Chicago branch generated approximately .06 percent of the bank's total
profits for the fiscal year ending March 2015. (Id fl16-7.) Paribas is a French bank with its
headquarters in Paris. (R. 152, Christie Decl. fl 3.) It has 6,800 branches worldwide, with three
branches and three other offrces in the United States, including a branch in Chicago. (R. 153,
Zambrana Decl., Ex. R at23,34.) The Chicago branch employs 47 individuals, which is less
than one-tenth of a percent of the 185,000 employees of Paribas worldwide.(Id n 4.) The branch
offers a variety of services, but its primary business is providing bank line lending services to
U.S. clients. (Id.)
The discovery directed at these banks seeks information about Defendants' assets, if any,
that the banks hold either here or abroad. Plaintiffs have served identical citations on the banks
that purport to compel them to freeze any assets of Defendants that they have, wherever these
assets may be located.
(R. 138, Viapiano Decl., Ex. A at 6; R. l53,Zarnbrano Decl., Ex. B.) The
citations also require a designated corporate officer of the banks to appear and be examined
under oath as to any assets the banks may hold belonging to Defendants. (See R. 138, Viapiano
Decl., Ex. A at 5-6.) The citations warn that the "failure to comply . . .may result in a judgment
being entered against you for the unsatisfied amount of this judgment," or arrest and the
imposition of contempt sanctions, including "imprisonment in the county jail." (Id. at 6.)
Plaintiffs have also served the banks with document subpoenas pursuant to Federal Rule
of Civil Procedure 45, and deposition subpoenas pursuant to Federal Rule of Civil Procedure
30(b)(6). The document subpoenas seek "[d]ocuments sufficient to identify all Iranian Accounts"
maintained by the banks from February 2012 to the present. (ld.,Ex. B at 19, 22.)"Irarian
Accounts" are defined as "any and all accounts at any and all branches or subsidiaries of [the
banks] that belonged to and/or were in the name of, or for the benefit of," Defendants. (Id. at22.)
For all such accounts, Plaintiffs seek an array of information, including "[a]ll account opening
documents," "[a]ll account customer information" for each account, current balances, detailed
transaction histories, and any documents regarding any account closures. (ld. at 19-20.)
Similarly, the Rule 30(bX6) subpoena requires the banks to designate an officer or
director who can testify regarding the following matters:
The details of all financial accounts maintained by [the banks] located anywhere
in the world held in the name of, or for the benefit of, Iran . . . . the names and
locations of the branches at which such accounts are held, the account numbers on
such accounts, the current account balances on such accounts, transaction
histories for such accounts and any communications with the Offrce of Foreign
Assets Control of the United States Treasury (OFAC), or any other department or
agency of the goverrrment of the United States concerning such accounts.
(R. 143, Viapiano Suppl. Decl., Ex. A at 7.)
The banks respond that they have duly searched the records at their Chicago branches and
have not located any responsive assets, documents, or information. (R. 152, Christie Decl. fl 7; R.
168, Cunningham Suppl. Decl. fl 6.) They further assert that they have no employee
with
knowledge of such accounts at their Chicago branches, and that these local branches do not have
access to a centralized database
of customer and account information that would allow them to
obtain documents and information located at the banks' headquarters, at other branches, or with
the banks' affiliates and subsidiaries worldwide.r 1R. 136, Cunningham Decl. flfl 8-11; R. 152,
Christie Decl. tf 5.) The banks asked Plaintiffs to voluntarily limit the scope of the subpoenas to
records and information located at the Chicago branches, but Plaintiffs would not agree to this
I
The Court notes that the New York branch of Paribas voluntarily coordinated a search for any information
available among its six U.S. offices regarding blocked assets of Defendants located in the United States, and at the
time of briefing the parties were working out an agreement for the turnover of this information. (See R. 159, Pls.'
Mem. at 4; R. 160, Tolchin Decl., Ex. D at2.)
limitation. (R. 138, Viapiano Decl. fl 8.) In Plaintiffs' view, the discovery issued requires the
banks to "search and produce documents and information located in any . . . branch anywhere in
the world." (ld.,Ex. C at25.)
The banks resist being ordered to produce discovery beyond their Chicago branches, as
they believe that this Court lacks personal jurisdiction over them and that principles
of
international comity militate against permiuing the expansive, global discovery that Plaintiffs
have requested. They argue that determining whether any accounts or documents are held in
other bank offices throughout the world would require a burdensome search and, further, that
disclosing these records would potentially subject them to civil or criminal liability in their home
countries. Therefore, they seek to quash the citations and subpoenas issued by Plaintiffs. (R. 133,
Bank of Tokyo's Mot. to Quash; R. 139, Bank of Tokyo's Mot. to Quash; R. 149, Paribas' Mot.
to Quash; R. 151, Paribas' Mem.; R. 152, Christie Decl.; R. 153, Zantbrano Decl.; R. 168,
Cunningham Decl.; R. 169, Wolfe Decl.; R.172, Banks' Reply; R. 173, Inoshita Decl.; R. 197,
Banks' Suppl. to Mot.)
Plaintiffs object to the banks' motions to quash and separately move to compel responses
to their discovery requests. (R. 154, Pls.' Mot. to Compel; R. 155, Pls.' Mem.; R. 158, Pls.' Mot.
to Compel; R. 159, Pls.' Mem.; R. 160, Tolchin Decl.; R. 164, Pls.' Opp'n; R. 165, Pls.' Opp'n;
R. 170, Pls.' Reply.) They acknowledge that they are seeking "discovery concerning Iranian
bank accounts maintained by the Bank[s] in [their] overseas branches." (R. 165, Pls.' Opp'n at
1). In their view, personal jurisdiction exists over the banks and
it is otherwise proper for the
Court to order such relief. (R. 155, Pls.' Mem.; R. 159, Pls.' Mem.) After extensive briefing,
these matters are now ripe for decision.2
2
The Court commends the attorneys for the excellent manner in which these difficult legal issues were briefed by all
sides.
ANALYSIS
Before turning to the parties' discovery dispute, some legal background on the FSIA and
applicable post-judgment discovery procedures is needed. "The default rule of United States law
is that foreign states are immune from suit and attachment of assets in United States courts, but
[the FSIA] provides a number of exceptions and special procedures for such cases." Wyatt v.
Syrion Arab Republic,800 F.3d 331, 333 (7th Cir. 2015). As is relevant here, the FSIA provides
that "American nationals may file suit against state sponsors of terrorism in the courts of the
United States."3 Bank Markazi v. Peterson,136 S. Ct. 1310, 1317 (2016) (citing 28 U.S.C.
$ 16054.) Specifically, they can seek money damages against a foreign state for personal injury
or death caused by an act of terrorism, including "torture, extrajudicial killing, aircraft sabotage,
hostage taking, or the provision of material support" to terrorist activities. 1d (quoting 28 U.S.C.
$ 1605A(a).) But obtaining a judgment against a foreign state is far from the end of the story:
Plaintiffs who prevail under the FSIA "often face[] practical and legal difficulties at the
enforcement stage," id. (citation omitted), and must "engage in the costly, burdensome, and often
fruitless task of searching for available assets" to execute their judgment. Wyatt,800 F.3d at334
(citation omitted).
Several legal principles limit the ability of a prevailing plaintiff from attaching assets of a
foreign state. "Subject to stated exceptions, the FSIA shields foreign-state property from
execution." Bank Markazi, 136 S. Ct. at
13 18.
Additionally, courts in the United States generally
lack authority to "execute against property in other countries." Republic of Argentina v. NML
Capital, Ltd., 134 S. Ct. 2250,2257 (2014). But other foreign-state property is available to
plaintiffs who obtain
a
judgment under Section 16054. Wyatt,800 F.3d at333. Attachable assets
Even though the underlying events in this case occurred in Israel, the FSIA applied because Shira Leibovitch is a
U.S. citizen. See Leibovitch,69T F.3d at 569.
'
include "foreign-state property located in the United States" that is'oused for a commercial
activity." Bank Markazi, 136 S. Ct. at l3 l8 (citing 28 U.S.C. $ 1610(a)(7), (bX3)); see also
I(yatt,800 F.3d at333. Additionally, the Terrorism Risk Insurance Act of 2002 ("TRIA")
authorizes execution ofjudgments obtained under the FSIA's state-sponsored terrorism
exception against "the blocked assets" of a terrorist party, its agencies, or its instrumentalities.
A "blocked asset" is defined
/d
as "any asset seized by the Executive Branch pursuant to either the
Trading with the Enemy Act (TWEA), or the International Emergency Economic Powers Act
(IEEPA)." Id. (citations omitted).
The FSIA does not address what post-judgment discovery procedures are available to
plaintiffs seeking attachment and execution of a judgment obtained against a foreign state under
Section 16014. NML Capital, 134 S. Ct. at2256 ("There is no [ ] provision forbidding or
limiting discovery in aid of execution of
a foreign-sovereign judgment debtor's assets.").
However, the Federal Rules of Civil Procedure apply to such proceedings, and the Rules
governing post-judgment discovery are generally "quite permissive." Id. at2254. Federal Rule of
Civil Procedure 69 provides that a judgment creditor "may obtain discovery from any personincluding the judgment debtor-as provided in these rules or by the procedure of the state where
the court is located." FED. R. Ctv. P. 69(a)(2). Plaintiffs here are invoking Illinois citation
proceedings, under which
a
judgment creditor can discover assets of a judgment debtor, and can
also compel "the application of non-exempt assets or income discovered toward the payment
of
the amount due under the judgment." 735Ilr-. Coup. Srar. 512-1402(a). Service of a citation has
the effect of creating a lien on the subject assets. 735lt-t. Covp. Srar. 512-1402(m). Because
of
this latter provision, citation procedures are distinct from an ordinary discovery proceeding: "[A]
citation to discover assets is more appropriately considered a document in the nature of a
summons." Textile Banking Co. v. Rentschler,65T F.2d 844, 851 (7th Cir. 1981). "The citation,
like a summons, commands the party served commands the party served to appear before the
court in regard to the specified cause." Id. "Failure to comply with a citation to discover assets is
punishable by contempt" and can even subject the respondent to "a judgment for the amount
unpaid." Id. at850.
I.
Personal Jurisdiction
With these principles in mind, the Court turns to the parties' discovery dispute. The
threshold issue presented by the parties' motions-and a point on which they strenuously
disagree-is whether the Court has personal jurisdiction to take any action against the banks,
either in connection with the citation or the discovery requests.a
In determining whether personal jurisdiction exists, the Court accepts all well-pleaded
allegations in the complaint as true, but may also consider outside materials such as affidavits.
See
Felland v. Clifton,682F.3d 665,672 (7th Cir. 2012). The plaintiff, as the party invoking
jurisdiction, bears the burden of establishing that personal jurisdiction exists. Kipp v. Ski Enter.
Corp. ofWisc., lnc.,783 F.3d695,697 (7thCir.2015). WhentheCourtdeterminespersonal
jurisdiction based on written submissions without holding an evidentiary hearing, the plaintiff
4
Plaintiffs argue in passing that the banks waived their objection to personal jurisdiction by filing a motion for
limited intervention in this case. (R. 165, Pls.' Opp. at 4-5.) The Court does not agree. "[T]o waive or forfeit a
personal jurisdiction defense, a defendant must give a plaintiff a reasonable expectation that it will defend the suit on
the merits or must cause the court to go to some effort that would be wasted if personal jurisdiction is later found
lacking." H-D Mich., LLC v. Hellenic Duty Free Shops 5.A.,694 F.3d 827,848 (7th Cir. 2012) (citation omitted).
By seeking limited intervention, the banks were following the Local Rules of this Court, which prohibit the filing of
any document-other than a motion to intervene-by a person who is not a party to a case. See N.D. Ilt-. L.R. 5.6.
The banks have been steadfastly raising their personal jurisdiction defenses since the beginning oftheir involvement
in this case. (See, e.g., R. 138, Viapiano Decl., Ex. D at 28; R. 143, Viapiano Supp. Decl., Ex. B at l2; R. l5l,
Paribas' Mem. at 10, R. 153, Zambrano Decl., Ex D at25; Id.,Ex. F. at 40.) By no means have they misled
Plaintiffs, nor have they caused this Court to expend unnecessary resources resolving the merits. Under these
circumstances, the banks cannot be deemed to have voluntarily submitted to the jurisdiction of this Court. Compare
Continental Bqnk, N.A. v. Meyer, l0 F.3d 1293, 1296-97 (7th Cir. 1993) (personal jurisdiction defense was deemed
waived after "defendants fully participated in litigation of the merits for over two-and-a-half years without actively
contesting personal jurisdiction," and "defendants' delay in urging this threshold issue manifest[ed] an intent to
submit to the court's jurisdiction").
must establish
a
prima facie case of personal jurisdiction to survive dismissal. Id. If the
defendant submits declarations or other outside materials challenging personal jurisdiction, the
plaintiff has an obligation to submit affirmative evidence supporting the exercise ofjurisdiction.
Purdue Research Found. v. Sanofi-Synthelabo,,S.l., 338 F.3d773,782-83 (7th Cir. 2003).
Although disputes must be resolved in the plaintiff s favor, unrefuted assertions contained in the
defendant's affidavits will be accepted as true. GCIU-Emp'r Ret. Fund v. Goldfarb Corp.,565
F.3d 1018, 1020 n.1 (7th Cir. 2009).
Personal jurisdiction refers to the Court's "power to bring a person into its adjudicative
process." N. GrainMktg., LLCv. Greving,743F.3d487,491(7thCir.2014) (citationomitted).
Put simply, jurisdiction to resolve a case on the merits requires "authority over the parties
(personal jurisdiction), so that the court's decision
will bind them." Ruhrgas AG
Oil
v. Marathon
Co., 526 U.S. 574, 577 (1999). Therefore, a court must have personal jurisdiction over the
respondent in a citation proceeding. See GE Betz, Inc. v. Zee Co.,718 F.3d 615, 630 (7th Cir.
2013)
("[A] third-party citation respondent in Illinois
has all of the qualities traditionally
associated with a defendant.")i Our Lody of Bellefonte Hosp. v. Ashland GI Servs., ZZC,
No. I 1
C 6833, 2012WL 787199, at *2 Qrl.D. Ill. Mar. 9,2012) (a court "must possess an independent
basis for personal jurisdiction over an individual to whom the court issues a citation"); Bank
Montreal v. Sr( Foods, 22C, No. 09 C 3479,201
("A court must
1
of
WL 4578357,at *4 (N.D. Ill. Sept. 30, 201 1)
have personal jurisdiction over the citation respondent in order to have the
authority to preside over the citation proceeding ."); Woolard v. Woolard, No. 05-C-7280,2009
WL 3150435, at *3 (N.D. Ill. Sept. 23,2009) ("Courts must have an independent basis [for]
personal jurisdiction over an individual to whom
it issues a citation.").
Likewise, a court must have personal jurisdiction to order compliance with a discovery
request. Reinsurance Co. of Am. v. Administratia Asigurarilor de Stat,902F.2d 1275,1281
(7th
Cir. 1990) ("A court or agency in the United States, when authorized by statute or rule of court,
may order a person subject to its jurisdiction to produce documents, objects, or other information
relevant to an action or investigation[.]" (citation omitted)); Gucci Am., Inc. v. Weixing
Li,768
F.3d122,l4l (2dCir.2014) ("Adistrictcourt... musthavepersonal jurisdictionovera
nonparty to compel it to comply with a valid discovery request under Federal Rule of Civil
Procedure 45)'); In re Uranium Antitrust Litig., 480 F. Supp. I138, 1145 (N.D.
Ill. 1979) ("Once
personal jurisdiction over the person and control over the documents by the person are present, a
United States court has power to order production of the documents."); see also 16 MooRe's
FeopRel PRecncE $ 108.125 (3d ed. 2003) ("A nonparty witness cannot be compelled to testify
at atnal, hearing, or deposition unless the witness is subject to the personal jurisdiction of the
court.").
"[T]he mechanics for asserting personal jurisdiction in federal court are found in Federal
Rule of Civil Procedure 4(k)." KM Enters., Inc. v. Glob.
Trffic
Techs., Lnc.,725 F.3d 718,723
(7th Cir. 2013).In essence, "federal personal jurisdiction is proper whenever the person would
be amenable to suit under the laws of the state in which the federal court sits (typically under a
state long-arm statute), subject always to the constitutional due process limitations encapsulated
in the familiar 'minimum contacts' test." Id. Thus, this Court can exercise personal jurisdiction
it would be permitted to do so under the Illinois long-arm
if
statute.s See Fpo. R. Crv. P.
aGXIXA); uBID, Inc. v. GoDaddy Grp., [nc.,623 F.3d 421,425 (7th Cir. 2010). There are two
5
The Illinois long-arm statute permits courts to exercise personal jurisdiction for any reason permitted by the Illinois
and United States Constitutions. 735 lu-. CoMP. SrAT. 512-209 (a)(2), (b)(a), (c). Thus, jurisdiction under the
Illinois long-arm statute is essentially coextensive with federal due process requirements. RAR, Inc. v. Turner Diesel
Ltd.,107 F.3d 1272,1276 (7thCir. 1997).
l0
typesof personal jurisdiction: generalandspecific.DaimlerAGv. Bauman,134 S. Ct.746,753
(2014). Plaintiffs argue that both are proper here, so the Court addresses each in turn.
A.
General Jurisdiction
"A court may
assert general jurisdiction over foreign (sister-state or foreign-country)
corporations to hear any and all claims against them" only when the corporation is "essentially at
home in the forum State." Daimler,134 S. Ct. at 754 (quotingGoodyear Dunlop Tires
Operations, S.A, v. Brown,564 U.S. 915,919 (2011)). "This is a demanding standard that
requires the defendant to have such extensive contacts with the state that it can be treated as
present in the state for essentially all purposes." uBID, 623 F.3d at
426.ln Daimler, the U.S.
Supreme Court rejected an overly expansive view that would permit corporations to be subject to
general personal jurisdiction in multiple states, and instead held that affiliations sufficient to
support the assertion of general jurisdiction are typically limited to the corporation's place
of
incorporation and principal place of business. Daimler,134 S. Ct. at 760. The Supreme Court
explained that what matters for purposes of general jurisdiction "is not whether a foreign
corporation's in-forum contacts can be said to be in some sense continuous and systematic," but
"whether that corporation's affiliations with the state are so continuous and systematic as to
render it essentially at home in the forum State." Id. at76l (citation and intemal quotation marks
omitted). Determining whether a corporation is "at home" in a particular state "calls for an
appraisal of a corporation's activities in their entirety, nationwide and worldwide," because "[a]
corporation that operates in many places can scarcely be deemed at home in all of them." Id. at
762 n.20.Instead, for general jurisdiction to exist, the corporation's affiliation with the forum
state must be "comparable to a domestic enterprise in that State."
11
Id. at758
n.ll.
Thus, following Daimler, in all but the most "exceptional" cases general jurisdiction over
a corporation is
limited to its place of incorporation and/or principal place of business. Id. at761
n.19. The Supreme Court provided the following example of an "exceptional" circumstance that
would meet the standard: where a world war forced a foreign company to temporarily relocate its
principal place of business to Ohio due to enemy activity abroad. Id. at76l n.l9 (citing Perkins
v. Benguet Constr. Mining Co.,342 U.S. 437 (1952)).In that circumstance, Ohio had effectively
become "a surrogate for the place of incorporation or head office," such that the imposition
of
general jurisdiction was wilranted. Id. at 756 n.8
The undisputed evidence before this Court shows that neither bank is incorporated in this
state or has its principal place of business here. They both have a branch in Illinois, and while the
existence of a single branch within the forum state was once thought a sufficient basis to exercise
general jurisdiction over a foreign bank, this practice is no longer valid after Daimler. See, e.g.,
Gucci,768 F.3d at 135 (after Daimler, non-party foreign bank was not subject to general
personal jurisdiction in New York simply because
there);
it maintained and operated branch offices
Hill v. Capital One Bank (USA), N.1., No. l4-CY-6236,2015 WL 468878, at*6-7 Of .D.
Ill. Feb. 3,2015) (Delaware bank with corporate headquarters in Virginia was not "at home" in
Illinois under Daimler even though it had ATM and customer help center in Illinois); Nicholson
v. E-Telequote Ins.,1nc.,
No. l4-CY-4269,2015 WL 5950659, at *4 (N.D. Ill. Oct.
("[D]oing l0 percent of your business in lllinois does not make
13, 2015)
a corporation 'at home'
in
Illinois.").
Indeed, Daimler explicitly criticized the practice asserting personal jurisdiction based on
the presence of a branch in the forum state and noted that the cases applying this rule "should not
attract heavy reliance today." Daimler,134 S. Ct. at 761 n.18. In the Supreme Court's view, such
t2
an expansive view of personal jurisdiction was "unacceptably grasping."6
Id. atT6L Plaintiffs
do
not argue that exceptional circumstances like those outlined in Daimler are present here, nor can
the Court discern any such circumstances from the record. Under Daimler, these banks are not
"at home" in this state simply because they have a branch here. Therefore, the Court finds that
general jurisdiction is lacking.
Plaintiffs try to resist this outcome by arguing that Daimler only applies to defendants,
and not to third parties. (R. 170, Pls.' Reply at2-5.) However, the Court cannot discern any valid
reason why Daimler would not apply any time the Court is called to decide personal jurisdiction.
The policies behind the requirement of personal jurisdiction were outlined by the Supreme Court
as
follows:
[T]he requirement represents a restriction on judicial power not as a matter of
sovereignty, but as a matter of individual liberty. . . .The defendant must generally
hire counsel and travel to the forum to defend itself from the plaintiff s claim, or
suffer a default judgment. The defendant may be forced to participate in extended
and often costly discovery, and will be forced to respond in damages or to comply
with some other form of remedy imposed by the court should it lose the suit. The
defendant may also face liability for court costs and attorney's fees. These
burdens are substantial, and the minimum contacts requirement of the Due
Process Clause prevents the forum State from unfairly imposing them upon the
defendant.
Phillips Petroleum Co. v.Shutts,472U.5.797,807-08 (1985) (citations and internal quotation
marks omitted). This same rationale applies to non-parties like the banks: they have been haled
into a foreign court, required to obtain counsel to represent their interests, and risk the imposition
of a judgment and/or sanctions if they fail to comply with Plaintiffs' filings.
u
Plaintiffs rely heavily on Wultz v. Bank of China Ltd.,298 F.R.D. 9 I (S.D.N.Y. 2014), in which a district court in
New York ordered discovery against a non-party foreign bank under similar facts. (See R. 166, Pls.' Opp. at 3-4; R.
170, Pls.' Reply at 15.) But there the bank did not contest personal jurisdiction. The court noted rn dicta that
personal jurisdiction existed because the bank "does business in New York and has a branch office in New York
City." 1filh,298 F.R.D. at 95 n.12. But the Second Circuit later held that this reasoning is no longer viable after
Daimler. See Gucci,768 F.3d at 135 ("[A]pplying the Court's recent decisionin Daimler, the district court may not
properly exercise general personaljurisdiction over the Bank [because] . . . the non-party bank [] has branch offices
in the forum, but is incorporated and headquartered elsewhere."). The Court therefore does not find it appropriate to
rely on llultz.
l3
For this reason, other courts have applied Daimler and earlier Supreme Court decisions
addressing personal jurisdiction generally to cases involving third parties. See Gucci,768 F.3d at
136-37 ("Lower federal courts . . . have adapted the test for civil defendants for use in assessing
the question whether they may properly exercise jurisdiction over a nonparty."); Our Lady
Bellefonte,2012WL787l99, at x3 (applying"International Shoe
of
and its progeny" to determine
whether it had personal jurisdiction over non-party for the purpose of ordering discovery).
Indeed, the rationale behind the personal jurisdiction requirement seems particularly relevant
here, as Plaintiffs are not just seeking discovery from the banks but are also pursuing citation
proceedings, which, given their unique structure, are quite similar to a lawsuit. See GE Betz, Inc.,
7l 8 F.3d at 630; Textile Banking Co., 657 F .2d at 851 . If anything, one would think that a more
restrictive standard should apply when assessing personal jurisdiction over non-parties, not a
looser one, because unlike defendants they are not accused of violating the plaintiff s rights and
essentially have "no dog in the fight." See Ryan W. Scott, Minimum Contacts, No Dog:
Evoluating Personal Jurisdictionfor Nonparty Discovery,88 Mnvlt. L. Rsv. 968,995-1004
(2004). For these reasons, the Court is unconvinced by Plaintiffs' argument.
Plaintiffs also argue that the banks should be deemed "at home" in Illinois because they
are registered to do business under the state's Foreign Banking Office
Act. (R. 170, Pls.' Reply
at 5 (citing 205\t-t-. Coup. Srer. 64513).) The Foreign Banking Office Act says nothing about
consent to jurisdiction, but Plaintiffs point out that under
banks, have the capacity to "sue or be sued." (Id.
an accurate statement of the law, but
Illinois law foreign banks, like Illinois
(citing2}5Ilt-. Covp. Srnr. 5/5(1)).) This is
it does not show that personal jurisdiction exists over the
banks. The ability to sue or be sued pertains to a party's capacity, as outlined in Federal Rule
Civil Procedure 17(b). This is not the same
as personal
t4
of
jurisdiction. "Capacity to sue or be sued
does not mean a defendant's amenability to suit in a particular
judicial district, which is a matter
of the existence or nonexistence of personal jurisdiction over a defendant there." LaSalle Nat'l
Bank v. Kearon, No. 98 C 5099, 1998 WL 901685, at * I (N.D. Ill. Dec. 17, 1998) (internal
quotation marks omitted); see also Swaim v. Moltan Co.,73 F.3d 711,716-18 (7th Cir. 1996)
(noting distinctions between lack of capacity and personal jurisdiction defenses). This general
language in the statute pertaining to capacity does not establish that personal jurisdiction exists
over the banks.
Plaintiffs also argue that general jurisdiction exists because the Illinois registration statute
requires foreign banks operating within the state to appoint a registered agent for service
process. (R. 159, Pls.' Mem. at 8 (citing 205 It-t. Covp.
Srer.
of
64519,645110).) They point to
Employers Insurance of Wausau v. Banco De Seguros Del Estado, 199 F.3d 937 (7thCir. 1999),
in which the Seventh Circuit held that "[b]y designating a local agent to serve process," the
defendant had "knowingly waived its right to dispute personal jurisdiction." Id. at 943. Notably,
the defendant in that case had expressly agreed to "submit to the jurisdiction of any Court
of
competent jurisdiction within the United States" and to "comply with all requirements necessary
to give such Court jurisdiction" pursuant to a private contract; thus, the Seventh Circuit was not
called to decide the effect of the state statute at issue here. See id. at 939. Indeed, in a case
decided before Wausou, the Seventh Circuit considered and rejected an argument similar to
Plaintiffs made under Indiana's foreign corporation registration statute. l[/ilson v. Humphreys
(Cayman) Ltd.,916F.2d 1239,1245 (7th Cir. 1990) ("Registering to do business is a necessary
precursor to engaging in business activities in the forum state," but it cannot "standing alone"
satisfy "the demands of due process" necessary to assert personal jurisdiction); see also ACUITY
v. Roadtec,.Irc.,No.
l3-CY-6529,2013WL6632631, at *5 (N.D. Il1. Dec. 16,2013) (applying
15
Wilson and holding that corporate defendant was not subject to general jurisdiction in Illinois
even though it was registered to conduct business and had appointed an agent for service
of
process in Illinois).
Additionally, Wausau was decided long before the Supreme Court's opinion in Daimler.
After Daimler, nttmerous district courts in this Circuit have concluded that registering to do
business in a state and/or designating a registered agent for service of process is not enough to
make a corporation "at home" in that state. See,
e.
g. ,
Dimitrov v. Nissan N. Am.,
,Inc. ,
No. I 5 C
06332,2015 WL 9304490, at*4-5 (N.D. Ill. Dec. 22,2015) (applying "the lessons of Daimler"
and holding that the court did not have general jurisdiction over foreign corporation simply
because
it was registered to do business in Illinois and conducted a small portion of its operations
there); U.S. BankNat'lAss'nv. BankofAm.,
N.l.,No. l:14-CV-01492-TWP,2015 WL
5971126, at *6 (S.D. Ind. Oct. 14,2015) (declining to followingWausau and holding that
"[m]erely registering to do business in Indiana . . . and also appointing an agent for purposes of
service ofprocess, does not establish personaljurisdiction over a corporation"); Shrumv. Big
Lots Stores, Inc.,No.3:14-CV-03135-CSBDGB,2014 WL 6888446,at*2,*7 (C.D. Ill. Dec.8,
2014) (foreign corporation was not "at home" in Illinois even though its contacts with Illinois
were "fairly extensive and delibersls"-lnsluding having a physical facility in Illinois,
registering to do business in the state, and maintaining a registered agent for service of process in
the state-as such contacts were insufficient under Daimler); Sullivan v. Sony Music Entm't,No.
14 CV
731,2014WL 5473142, at *3 (N.D. Ill. Oct. 29,2014) (foreign corporation was not o'at
home" in Illinois even though it was registered to do business there, maintained a registered
agent for service ofprocess, and operated a distribution
contacts fell short of what was requiredby Daimler).
t6
facility in the state, because such
Indeed, even under Illinois law, the appointment of a registered agent is not determinative
in the personal jurisdiction analysis. Alderson v. Southern Co.,747 N.E.2d 926,944 (Ill. App. Ct.
2001) (holding that foreign corporation was not "doing business" in Illinois, and thus personal
jurisdiction was lacking, even though corporation had some contact with the state and maintained
a registered agent here, because
"[t]here is nothing in [the Illinois Code of Civil Procedure] that
supports asserting in personan jurisdiction over a corporate defendant simply because the
plaintiff served summons upon the defendant's Illinois registered agent."). This interpretation is
notable because, as the Supreme Court recognized in Daimler, for a federal court to exercise
personal jurisdiction over a foreign corporation its affiliation with the forum state must be
"comparable to a domestic enterprise in that State." Daimler, 134 S. Ct. at 758 n.l
reasons outlined above, the banks do not have sufficient connections to
l.
For the
Illinois to meet this
standard.
Plaintiffs rely on Vera v. Republic of Cuba,9l F. Supp. 3d 561 (S.D.N.Y. 2015), in
which a court in the Southern District of New York ordered discovery from a third-party foreign
bank under similar circumstances. (See R. 159, Pls.' Mem. at 9.) The Court does not frnd Vera
persuasive. Indeed, the court in Vera acknowledged that after Daimler, cotrts can no longer
exercise general jurisdiction over a foreign corporation simply because it has a branch office
within the forum state. Vera, 91 F. Supp. 3d at 566-67. Instead, the court hinged its jurisdiction
on the third party's "consent" to personal jurisdiction by registering to do business in the forum
t7
state.T
Id. at 570-71. But this reasoning has since been rejected by the Second Circuit. After Vera
was decided, the Second Circuit expressly held that in light of Daimler, a foreign corporation's
compliance with state registration and agent-appointment statutes did not give rise to general
jurisdiction, even though "they might have sufficed under the more forgiving standard that
prevailed in the past." Brown v. Lockheed Martin Corp., 814 F.3d 619, 626 (2d Cir. 2016). As
discussed above, district courts in this Circuit applying Daimler have reached the same
conclusion. See Dimitrov,2015 WL 9304490, at *4-5; Shrum,2014 WL 6888446, at *7;
Sullivan,2014 WL 5473142, at *3.
Plaintiffs also rely on the Supreme Court's majority opinion in Republic of Argentina
v.
NML Capital for the proposition that broad post-judgment discovery should be permitted in
FSIA execution proceedings. (See R. 165, Pls.' Opp'n at 2; R. 170, Pls.' Reply at l-5.) In that
case, the Supreme Court held that the FSIA does not contain any provisions forbidding or
limiting the scope of discovery in aid of execution of
a foreign state's assets. 134 S. Ct. at 2257-
58. However, NML Capital did not address the threshold issue of personal jurisdiction in such
proceedings, as no one raised a challenge to personal jurisdiction; rather, the "single, narrow
question" before the Court was whether the FSIA required different discovery rules "when the
judgment debtor is a foreign state." Id. at2255. The case is thus of little assistance in deciding
the parties' dispute over personal jurisdiction. For all these reasons, the Court concludes that
it
does not have general jurisdiction over the banks.
7
Vera is also factually distinguishable because there the court specifically noted that the documents requested by the
subpoena could be "found via electronic searches performed in [the bank's] New York office, and are within this
j urisdiction." Vera, 9 I F. Supp. 3d at 57 I . The banks here have submitted evidence that they have no responsive
documents at their Chicago branches and do not have access to a centralized database that would permit them to
search for documents located at their headquarters or at other branches, subsidiaries, or affiliates throughout the
world. (R. 136, Cunningham Decl. fltT8-l l; R. 152, Christie Decl. fl 5.) The Court also notes thatthe Second Circuit
never reviewed the merits of the district court's order in Vera, as it determined that the order was not reviewable as a
final decision under 28 U.S.C. $ l29l or as an interlocutory order under 28 U.S.C. S 1292. Vera v. Republic of
Cuba, 802 F .3d 242, 246-49 (2d Cir. 20 I 5).
18
B.
Specific Jurisdiction
That is not the end of the matter, however, because Plaintiffs also argue that the Court
can exercise specific jurisdiction over the banks. (R. 159, Pls.' Mem. at l0-13.) Specific
jurisdiction requires
a
plaintiff to show that the controversy between the parties "arises out of the
forum-related activity." Advanced Tactical Ordnance Sys., LLC v. Real Action Pointball, Inc.,
751 F.3d 796,800 (7th Cir. 2014). The exercise of specific jurisdiction is proper if two
requirements are met: the defendant's conduct must satisfr the "minimum contacts" test, and the
"maintenance of the suit [must] not offend traditional notions of fair play and substantial
justice." Int'l Shoe Co. v. Washington,326 U.S. 310,316 (1945) (citation and internal quotation
marks omitted).
1.
Minimum Contacts
To establish the requisite minimum contacts to support specific jurisdiction, "not just any
contacts
will do: For
a State to exercise jurisdiction consistent with due process, the defendant's
suit-related conduct must create a substantial connection with the forum State." Advanced
Tactical,751F.3dat801 (citing Waldenv. Fiore,l34S.Ct. 1115,1121 (2010);seealsoGCIUEmp'r Ret. Fund,565 F.3d at 1024 (for specific jurisdiction to exist, the plaintiff
s cause
of
action "must directly arise out of the specific contacts between the defendant and the forum
state" (citation omitted)). Additionally, the defendant's connections to the forum must arise out
of contacts that he himself created. Burger King Corp. v. Rudzewicz,471U.S.462,475 (1985).
o'Contacts
between the plaintiff . . . and the forum do not satisff this requirement." Advanced
Tactical,751 F.3d at 801.
Applying these principles here, it is apparent that there is virtually no link between the instate banking activities of these French and Japanese banks and
19
Plaintiffs' claims arising from
a
terrorist attack that occurred in Israel with the support of the Iranian government. It certainly
cannot be said that Plaintiffs' claims "directly arise" out of the banking activities of these local
branches. See GCIU,565 F.3d at 1024. Thus, under traditional legal principles, specific
jurisdiction is lacking.
Although the Seventh Circuit has not addressed this issue, two Circuits have reformulated
the minimum-contacts inquiry in cases involving third-party discovery, focusing more narrowly
"on the connection between the nonparty's contacts with the forum and the discovery order at
issue." Gucci,768 F.3d at 137; see also S.E.C. v. Knowles, 87 F.3d 413, 418 (1Oth Cir. 1996)
(holding that court's exercise of specific jurisdiction was proper where subpoena enforcement
action arose out of nonparty's contacts with the forum). It is unclear whether this test is proper,
as the Supreme
Court has never expressly addressed specific jurisdiction over non-parties. See
Gucci,768 F.3d at 136. But even if the narrower inquiry is the proper one, there is still an
insufficient link between the in-state activities of these foreign banks and the discovery sought
by Plaintiffs. There is evidence that the banks hold no accounts for Defendants in Illinois or
anywhere within the United States. Yet Plaintiffs seek vast discovery from the Chicago branches
of these banks related to Defendants' assets located abroad.
Plaintiffs point out that these two banks have been found guilty of wrongdoing by
regulators, in that they processed financial transactions involving Sudan, Iran, Burma, and other
countries with which the United States does not conduct business. Specifically, Paribas pled
guilty to processing transactions on behalf of these countries that should have been blocked
under U.S. Treasury regulations. (R. 160, Tolchin Decl., Ex. H-J.) Bank of Tokyo, in turn, was
sanctioned by the New York State Department of Financial Services for misleading the
department and violating New York banking laws in connection with U.S. dollar-clearing
20
transactions conducted on behalf of Sudanese, Iranian, and Burmese parties. (R. 156, Tolchin
Decl., Ex. G.) This conduct is certainly far from commendable, but Plaintiffs have not
demonstrated an adequate connection between these wrongful activities and the banks' branches
in Illinois.8
Plaintiffs argue that the proper minimum contacts test should look to the banks' activities
within the United States as a whole, not just the state of Illinois, because this action arises under
the
ATA. (R. 155, Pls.' Mem. at 10-11; R. 170, Pls.' Reply at 7.) When
a federal statute that
creates a cause of action prescribes its own rules for service of process, "the Federal Rules
provide that service made according to the statute is effective to establish personal jurisdiction
over the defendant, regardless of whether a court of the state encompassing the federal district
could exercise personal jurisdiction over the defendant." Waeltz v. Delta Pilots Ret Plan,30l
F.3d 804, 807 n.3 (7th Cir. 2002).In such a case, the personal jurisdiction analysis turns on
whether the defendant has sufficient minimum contacts with the United States as a whole, rather
than just with the forum state. Id.
The ATA does in fact contain its own service provision that authorizes nationwide
service of process.e 18 U.S.C. $ 233a(a). But Plaintiffs are not proceeding with a substantive
t As to Paribas, the record shows that its "subsidiary in Geneva ('BNPP Suisse') and branch in Paris ('BNPP Paris')
facilitated or conducted the overwhelming majority of the apparent violations of U.S. sanctions laws." (R. 160-8,
Tolchin Decl., Ex. H at2.) As to Bank of Tokyo, some of the dollar-clearing transactions-a process by which U.S.
dollar-denominated transactions are satisfied between counterparties through a U.S. bank-were settled through its
New York branch and other New York-based financial institutions. (R. 156-7, Tolchin Decl., Ex. G at 2 & n.l .)
However, the bulk of the wrongdoing was attributed to high-ranking corporate officers, including its Compliance
Manager and Executive Officer of the Global Planning Division, who were located abroad. (See id. at I 0- I I .)
'The FStl also contains special provisions relating to service of process over foreign states. 28 U.S.C. $ 1608(b).
Plaintiffs do not argue, nor can the Court discern, how provisions pertaining to service on a foreign sovereign might
be applicable to a third-party discovery dispute involving a private bank. Indeed, the FSIA is quite unique, in that
there is generally no need to conduct a minimum-contacts analysis in a case against a foreign state under the FSIA
because the statute expressly provides that personaljurisdiction exists over the defendant as long as subject matter
jurisdiction exists and service was proper.28 U.S.C. $ 1330(b) ("Personaljurisdiction over a foreign state shall exist
as to every claim for relief over which the district courts have jurisdiction under subsection (a) where service has
been made under section 1608 of this title.").
2t
claim against the banks under the ATA; instead, this is a post-judgment proceeding against nonparties under Rule 69. Additionally, the ATA's nationwide service provision is triggered only
if
the action is filed in one of the venues specified in that statute. Wultz v. Islamic Republic of lran,
762F. Supp. 2d 18,25-26 (D.D.C. 201 1) ("[P]roperly understood, invocation of the ATA's
provision of nationwide service of process rests on the satisfaction of its venue clause."). This is
in accord with how the Seventh Circuit has interpreted another federal statute with similar
language. KM Enters.,725 F.3d at 730 ("To avail oneself of the privilege of nationwide service
of process [under the Clayton Act], a plaintiff must satisfii the venue provisions of the [Act].
If
she wishes to establish venue exclusively through [the general venue requirements under 28
U.S.C. $ 1391], she must establish personal jurisdiction some other way.").
Plaintiffs do not argue-nor is it clear from the record-that the special venue provisions
contained in the ATA are satisfied in this case. To satis$ the ATA's venue requirements, an
action must be filed in a district "where any plaintiff resides," or in any district where'oany
defendant resides or is served, or has an agent." l8 U.S.C. $ 233a(a). Plaintiffs asserted generally
in the complaint that "[v]enue is proper in this Court pursuant to l8 U.S.C. $ T3a@)," without
specifying which provision applies. (R.
l,
Compl. tf 4.) There is nothing before the Court to
suggest that any of the Plaintiffs reside in this District, and in fact Plaintiffs have been obtuse
about this issue, stating in their briefing that their place of residence is "not relevant." (R. 170,
Pls.' Reply at 8-9.) It is also apparent from the record that Defendants do not reside in this
District, have no agent here, and were not served here. Instead, Defendants were served through
diplomatic channels by the Swiss Embassy in Tehran, Iran, at the request of the U.S. Department
of State in Washington, D.C. (R. 26, Return of Service.)
22
Because of these complicating factors, the Court finds
it difficult to rely on the cases
cited by Plaintiffs where courts found that the appropriate inquiry in a suit involving the ATA is
the defendant's minimum contacts with the United States as a whole. See, e.g.,In re Terrorist
Attacks on Sept. I
l, 2001 ,349
F. Supp. 2d765,806 (S.D.N.Y. 2005) (where personal
jurisdiction is asserted under the ATA's nationwide service provision, the "relevant inquiry
under such circumstances is whether the defendant has minimum contacts with the United States
as a
whole [to satisff Fifth Amendment due process requirements], rather than . . . with the
particular state in which the federal court sits."). If the nationwide service of process provision is
inapplicable, personal jurisdiction must accord with that of the forum state. Felland, 682 F.3d at
672; see also Wultz,762F. Supp. 2dat30 (where nationwide service provision of ATA did not
apply, defendant had to have sufficient minimum contacts with the forum state, not the United
States as a whole, for personal jurisdiction to exist); FTC v. Cleverlink Trading Zrd , No. 05 C
2889,2006 WL 1735276, at *4 (N.D. ilI. June 19,2006) ("Absent such a nationwide service
of
process provision, due process requires that a person or corporation have minimum contacts
with
the forum state before a court may exercise personal jurisdiction.").
But even if the Court were to consider the banks' activities within the United States as a
whole, while it presents closer question, the Court would still find an insuffrcient link between
the discovery sought and the banks' activities to warrant the exercise of specific jurisdiction. It
bears repeating that these banks conduct a very small portion of their business in the United
States when considering their operations as a whole. Bank of Tokyo has 11 branches in the
United States out of 700 worldwide. (R. 168, Cunningham Decl. flfl 2-4.)Its operations in the
United States made up approximately 3.9 percent of its total profits for the fiscal year ending
23
March 201
5
r
.
0
(Id. n 5 ) Paribas has a total of six branches and offices in the United States out
thousands worldwide. (R. 152, Christie Decl. fl 3; R. 153, ZarrrbranaDecl., Ex. R at34.) As
of
of
2015, it had worldwide assets totaling approximately $2.3 trillion, with around $77 billion
(roughly three percent) being located in the United States. (R. 169, Wolfe Decl., Exs. A-F.)
Although there is evidence that the banks availed themselves of the U.S. banking system
to process certain transactions that should have been blocked under federal law, the discovery
sought by Plaintiffs is not limited to those specific transactions. It is far more expansive, as
Plaintiffs are seeking detailed information related to any accounts held by Defendants anlruthere
in the world. Evidence that these non-party banks conducted general banking activities within the
United States that in some way benefitted Defendants is not sufficient to support the exercise of
specific jurisdiction. See In re Terrorist Attacl
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