Lelchook et al v. Islamic Republic of Iran et al
Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. The defendant's motion to dismiss (Docket No. 88 ) is DENIED. The case is TRANSFERRED to the Eastern District of New York pursuant to 28 U.S.C. § 1631. (Geraldino-Karasek, Clarilde)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
THE ISLAMIC REPUBLIC OF IRAN;
THE CENTRAL BANK OF THE ISLAMIC
REPUBLIC OF IRAN;
BANK SADERAT IRAN; and
BANK SADERAT, PLC,
ESTER LELCHOOK, individually and
as personal representative of the
Estate of David Martin Lelchook;
MICHAEL LELCHOOK; YAEL LELCHOOK;
ALEXANDER LELCHOOK; and
MEMORANDUM AND ORDER
December 20, 2016
David Lelchook, an American citizen, was killed by a rocket
fired by Hezbollah into northern Israel during the summer of
2006. His relatives, the plaintiffs here, allege that the
defendants -- the Islamic Republic of Iran (“Iran”), the Central
Bank of the Islamic Republic of Iran (“CBI”), Bank Saderat Iran
(“BSI”), and Bank Saderat, PLC (“BSPLC”) -- helped wire money to
Hezbollah. The plaintiffs have brought claims under the Foreign
Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq., and
the Antiterrorism Act (“ATA”), 18 U.S.C. § 2331 et seq., as well
as supplemental tort claims under Israeli and Massachusetts law.
BSPLC now moves to dismiss for lack of personal jurisdiction.
The Court DENIES the defendant’s motion (Docket No. 88) and
TRANSFERS the case to the Eastern District of New York pursuant
to 28 U.S.C. § 1631.
FACTUAL AND PROCEDURAL BACKGROUND
This case has traversed a long and torturous path. The
plaintiffs initially filed this lawsuit in the District Court
for the District of Columbia. See Lelchook v. Cent. Bank of the
Islamic Republic of Iran, Civ. No. 10-1184 (RCL) (D.D.C. Aug.
20, 2013) (“Lelchook I”). In that case, the plaintiffs brought
the same claims as those brought here: FSIA claims, ATA claims,
and Israeli tort claims. While the plaintiffs’ claims were
pending in Lelchook I, another group of plaintiffs brought the
same set of claims against the same four defendants. See Kaplan
v. Cent. Bank of the Islamic Republic of Iran, 961 F. Supp. 2d
185, 190 (D.D.C. 2013). The claims at issue in Kaplan involved
different rocket attacks during the same 34-day conflict along
the border between Israel and Lebanon. Id. at 188. The Kaplan
court dismissed all claims against BSPLC and BSI, including the
claims against BSPLC at issue here: that BSPLC had violated the
ATA by aiding and abetting, or directly engaging in,
international terrorism. Id. at 206. The court reasoned that the
ATA’s “act of war” exception precluded liability against BSPLC.
Id. at 199-201; see also 18 U.S.C. § 2336(a) (“No action shall
be maintained . . . for injury or loss by reason of an act of
war.”). The court did not address whether it had personal
jurisdiction over BSPLC at the time of its dismissal.
Citing its decision in Kaplan, but without affording the
Lelchook I plaintiffs a separate opportunity to brief the
applicability of the “act of war” exception, the court dismissed
all of the plaintiffs’ claims against BSI and BSPLC. See
Lelchook I, slip op. at 2. Specifically, the court dismissed
“plaintiffs’ FSIA claims against BSI,” “all of plaintiffs’ ATA
claims” against BSPLC, and all “Israeli Tort claims against BSI
and BSPLC.” Id. Again, the court did not address personal
jurisdiction with respect to BSPLC.
After this adverse ruling in the District of Columbia, the
plaintiffs refiled the case here on November 2, 2015. BSPLC then
moved to transfer this case under 28 U.S.C. § 1404(a) back to
the District of Columbia. After extensive briefing and two
hearings, the Court denied BSPLC’s motion to transfer. Lelchook
v. Islamic Republic of Iran, No. CV 15-13715-PBS, 2016 WL
4203415, at *1 (D. Mass. Aug. 9, 2016). The Court incorporates
and assumes familiarity with that opinion.
The plaintiffs then filed an amended complaint. This latest
iteration provides two bases for personal jurisdiction: First,
the plaintiffs argue that the rocket attack that killed David
Lelchook was directed at the United States. Second, the
plaintiffs assert that some or all of the $50 million
transferred between BSPLC and its parent bank -- and that was
ultimately wired to Hezbollah -- was processed through the
United States. BSPLC now moves to dismiss for lack of personal
jurisdiction asserting that neither theory provides a basis for
Standard of Review
On a motion to dismiss for lack of personal jurisdiction
under Federal Rule of Civil Procedure 12(b)(2), the plaintiff
bears the burden of proving that the Court has personal
jurisdiction over the defendant. Daynard v. Ness, Motley,
Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir.
2002). “When a district court rules on a motion to dismiss for
lack of personal jurisdiction without holding an evidentiary
hearing, as in this case, the ‘prima facie’ standard governs its
determination.” United States v. Swiss Am. Bank, Ltd., 274 F.3d
610, 618 (1st Cir. 2001) (“Swiss Am. Bank III”). The prima facie
standard “permits the district court to consider only whether
the plaintiff has proffered evidence that, if credited, is
enough to support findings of all facts essential to personal
jurisdiction.” Daynard, 290 F.3d at 51 (quotation marks
omitted). The Court “must accept the plaintiff’s (properly
documented) evidentiary proffers as true,” and “construe them in
the light most congenial to the plaintiff’s jurisdictional
claim.” Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007)
(quotation marks omitted). The facts put forward by the
defendants “become part of the mix only to the extent that they
are uncontradicted.” Id.
First Theory of Jurisdiction: Rocket Attack Targeted Forum
The plaintiffs’ first theory is that the rocket that
Hezbollah fired from Lebanon into Israel directly targeted the
In federal question cases, like this one, “the
constitutional limits of the court’s personal jurisdiction are
drawn in the first instance with reference to the due process
clause of the fifth amendment.” Lorelei Corp. v. Cnty. of
Guadalupe, 940 F.2d 717, 719 (1st Cir. 1991). “In such
circumstances, the Constitution requires only that the defendant
have the requisite ‘minimum contacts’ with the United States,
rather than with the particular forum state (as would be
required in a diversity case).” United Elec., Radio & Mach.
Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1085
(1st Cir. 1992). “The defendant’s national contacts take center
stage because the rule applies only to situations in which
federal courts draw jurisdictional authority from the federal
sovereign (unreinforced by ‘borrowed’ state statutes), and,
thus, the applicable constitutional requirements devolve from
the Fifth rather than the Fourteenth Amendment.” United States
v. Swiss Am. Bank, Ltd., 191 F.3d 30, 36 (1st Cir. 1999) (“Swiss
Am. Bank I”). The analysis under the two due process clauses is
otherwise the same. See Waldman v. Palestine Liberation Org.,
835 F.3d 317, 331 (2d Cir. 2016) (“[W]e conclude that the
minimum contacts and fairness analysis is the same under the
Fifth Amendment and the Fourteenth Amendment in civil cases and
proceed to analyze the jurisdictional question.”). Non-sovereign
entities, even those with governmental attributes, have due
process rights under the Fifth Amendment. See id. at 329.
This “constitutional inquiry proceeds in three steps:
relatedness, purposeful availment, and reasonableness.” Swiss
Am. Bank I, 191 F.3d at 36. The First Circuit has explained the
steps as follows:
First, the claim underlying the litigation must directly
arise out of, or relate to, the defendant’s forum-state
activities. Second, the defendant’s in-state contacts
must represent a purposeful availment of the privilege
of conducting activities in the forum state, thereby
invoking the benefits and protections of that state’s
laws and making the defendant’s involuntary presence
before the state’s courts foreseeable. Third, the
exercise of jurisdiction must, in light of the Gestalt
factors, be reasonable.
Adelson, 510 F.3d at 49 (quotation marks and internal citations
omitted).1 The plaintiff “must succeed on all three prongs in
order to establish personal jurisdiction.” C.W. Downer & Co. v.
Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st Cir. 2014).
If the plaintiff fails to satisfy the first two prongs, the
Court need not reach the issue of reasonableness. Sawtelle v.
Farrell, 70 F.3d 1381, 1394 (1st Cir. 1995) (“[T]he gestalt
factors come into play only if the first two segments of the
test for specific jurisdiction have been fulfilled.”).
The relatedness prong is a “flexible, relaxed standard,”
which “requires the plaintiff to show a demonstrable nexus
The plaintiffs assert that the recent passage of the Justice
Against Sponsors of Terrorism Act (“JASTA”), Pub. L. No. 114222, 130 Stat. 852 (2016), changes the inquiry. Congress passed
JASTA in part to allow suits against Saudi Arabia for the
September 11 attacks. JASTA amends the Foreign Sovereign
Immunities Act, 28 U.S.C. § 1605A, to allow suits under the ATA
against foreign states and to permit ATA liability for aiding
and abetting international terrorism. The plaintiffs say that
JASTA also broadened the reach of a federal court’s exercise of
personal jurisdiction, citing the act’s non-binding findings of
fact. See Pub. L. No. 114-222, § 2(a)(6), 130 Stat. 852, 852
(2016) (“Persons, entities, or countries that knowingly or
recklessly contribute material support or resources, directly or
indirectly, to persons or organizations that pose a significant
risk of committing acts of terrorism that threaten the security
of nationals of the United States . . . necessarily direct their
conduct at the United States, and should reasonably anticipate
being brought to court in the United States to answer for such
activities.”). Congressional findings of fact do not change the
constitutional analysis in this case. See, e.g., Rothe Dev.,
Inc. v. U.S. Dep’t of Def., 836 F.3d 57, 66 (D.C. Cir. 2016)
(“Findings, like a preamble, may contribute to ‘a general
understanding of a statute,’ but . . . they ‘are not an
operative part of the statute.’”) (citation omitted).
between its claims and the defendant’s forum-based activities,
such that the litigation itself is founded directly on those
activities.” C.W. Downer, 771 F.3d at 66 (quotation marks,
internal citations, and alterations omitted). “The purposeful
availment prong represents a rough quid pro quo: when a
defendant deliberately targets its behavior toward the society
or economy of a particular forum, the forum should have the
power to subject the defendant to judgment regarding that
behavior.” Id. (quotation marks, internal citations, and
In assessing the purposeful availment prong, the proper
object of the analysis is the forum itself, not the forum’s
residents. See Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014). In
Walden, the Supreme Court held that a Nevada district court
lacked personal jurisdiction over a Georgia police officer who
seized cash from individuals in the Atlanta airport during their
return trip to Nevada. The Court explained that “our ‘minimum
contacts’ analysis looks to the defendant’s contacts with the
forum State itself, not the defendant’s contacts with persons
who reside there.” Walden, 134 S. Ct. at 1122 (emphasis added).
“[A] defendant’s relationship with a plaintiff or third party,
standing alone, is an insufficient basis for jurisdiction.” Id.
at 1123. “Due process requires that a defendant be haled into
court in a forum State based on his own affiliation with the
State, not based on the ‘random, fortuitous, or attenuated’
contacts he makes by interacting with other persons affiliated
with the State.” Id. at 1123 (internal citation omitted). The
“same principles apply when intentional torts are involved.” Id.
The plaintiffs argue that a rocket sent from Lebanon into
Israel directly targeted the United States. The plaintiffs’
allegation is that BSPLC helped funnel funds from Iran to
Hezbollah. Hezbollah then fired rockets into Israel. One of the
rockets struck and killed an American. The plaintiffs do not
allege any facts that would plausibly demonstrate that Hezbollah
purposely directed the rocket at the United States or American
citizens abroad. The plaintiffs’ allegations are inadequate to
establish personal jurisdiction.
A number of post-Walden decisions confirm this result. The
District Court for the District of Columbia recently concluded
that the “argument that specific jurisdiction may be based on
the effects of the Palestinian Authority’s acts on the U.S.
citizens living in Israel is vitiated by the Supreme Court’s
holding in Walden.” Livnat v. Palestinian Authority, 82 F. Supp.
3d 19, 32 (D.D.C. 2015), appeal docketed, No. 15-7024 (D.C. Cir.
Mar. 18, 2015) (emphasis in original). The court explained:
Plaintiffs claim that by attacking a group of Jewish
worshippers in the West Bank -- without any actual
knowledge or even a reason to believe that those victims
were connected to the United States -- the Palestinian
Authority was attempting to influence U.S. government
policy towards Israel. Because this claim does not allow
the Court to conclude that ‘defendant's conduct connects
[it] to the forum in a meaningful way,’ it is an
insufficient basis for specific personal jurisdiction.
Livnat, 82 F. Supp. 3d at 33 (quoting Walden, 134 S. Ct. at
1125). Other decisions in the District Court for the District of
Columbia have reached the same conclusion. See Estate of Klieman
v. Palestinian Auth., 82 F. Supp. 3d 237, 245–46 (D.D.C. 2015),
appeal docketed, No. 15–7034 (D.C. Cir. Apr. 8, 2015); Safra v.
Palestinian Auth., 82 F. Supp. 3d 37, 47–48 (D.D.C. 2015),
appeal docketed, No. 15–7025 (D.C. Cir. Mar. 18, 2015).
Citing Walden and these three district court cases, the
Second Circuit recently reversed a jury verdict against the
Palestinian Authority and the Palestine Liberation Organization,
holding that the district court lacked personal jurisdiction
over the defendants. Waldman, 835 F.3d at 327-41. After holding
that the district court’s exercise of general personal
jurisdiction over the defendants was in error, the court
assessed and rejected the plaintiffs’ assertion of specific
In short, the defendants were liable for tortious
activities that occurred outside the United States and
affected United States citizens only because they were
victims of indiscriminate violence that occurred abroad.
The residence or citizenship of the plaintiffs is an
insufficient basis for specific jurisdiction over the
defendants. A focus on the relationship of the
defendants, the forum, and the defendants’ suit-related
conduct points to the conclusion that there is no
specific personal jurisdiction over the defendants for
the torts in this case.
Id. at 337.
Based on Walden and its progeny, the Court concludes that
exercising jurisdiction on the basis of the plaintiffs’ first
theory would violate due process.
III. Second Theory of Jurisdiction: Wire Transfers Processed
Through New York
The plaintiffs’ second theory of personal jurisdiction is
that the wire transfers at issue were processed through the U.S.
A district court cannot exercise personal jurisdiction over
a defendant unless two conditions are satisfied: (1) a “statute
or rule authorizes the forum court to exercise its dominion over
the defendants,” and (2) the “court’s exercise of that
jurisdiction would comport with due process.” Swiss Am. Bank I,
191 F.3d at 35-36. As the statutory basis for jurisdiction, the
plaintiffs rely on Rule 4(k)(2). Rule 4(k)(2) states:
For a claim that arises under federal law, serving a
summons or filing a waiver of service establishes
personal jurisdiction over a defendant if:
(A) the defendant is not subject to jurisdiction in
any state’s courts of general jurisdiction; and
(B) exercising jurisdiction is consistent with the
United States Constitution and laws.
Fed. R. Civ. P. 4(k)(2). Rule 4(k)(2) is a catch-all personal
jurisdiction provision that “functions as a sort of federal
long-arm statute.” Swiss Am. Bank I, 191 F.3d at 36. The rule
ensures that foreign defendants who lack “single-state contacts
sufficient to bring them within the reach of a given state’s
long-arm statute,” but who have “had enough contacts with the
United States as a whole to make personal jurisdiction over them
in a United States court constitutional” are held responsible
for civil violations in federal court (e.g., a defendant that
bombs an American embassy abroad may lack minimum contacts with
any particular state, but the defendant has established the
requisite contacts with the nation as a whole). Id. at 40.
The First Circuit has explained that “three elements are
required for the exercise of personal jurisdiction under Rule
4(k)(2): (1) the plaintiff’s claim must arise under federal law;
(2) the defendant must be beyond the jurisdictional reach of any
state court of general jurisdiction (the ‘negation
requirement’); and (3) the exercise of jurisdiction must not
violate the defendant’s rights under the Constitution or federal
law.” Swiss Am. Bank III., 274 F.3d at 617.
The first requirement is not in dispute. The claim at issue
is brought under the ATA, a federal statute. See 18 U.S.C.
However, the plaintiffs have not satisfied the second
requirement. To establish a prima facie case under Rule 4(k)(2),
the First Circuit requires that a plaintiff “certify that, based
on the information that is readily available to the plaintiff
and his counsel, the defendant is not subject to suit in the
courts of general jurisdiction of any state.” Swiss Am. Bank I,
191 F.3d at 41. Without such a certification, Rule 4(k)(2) does
not apply. See, e.g., Acushnet Co. v. Zimventures, LLC, 155 F.
Supp. 3d 97, 106 (D. Mass. 2015) (“As the Court has already
concluded that the Moving Defendants had sufficient contacts
with Massachusetts to give rise to jurisdiction under the
Massachusetts long-arm statute, Rule 4(k)(2) is inapposite
here.”); In re Lupron Mktg. & Sales Practices Litig., 245 F.
Supp. 2d 280, 302–03 (D. Mass. 2003) (“The Rule requires
plaintiffs to certify that to their knowledge, based on
information that is ‘readily available,’ [the defendant] is not
subject to the jurisdiction of any state court. This they have
not done.”); Richards v. Tsunami Softgoods, Inc., 239 F. Supp.
2d 80, 83 (D. Me. 2003) (“Because a party may invoke Rule
4(k)(2) only where no individual state may properly exercise
personal jurisdiction over a defendant, the Court will first
consider whether jurisdiction is properly exercised under the
Maine long-arm statute.”).
The plaintiffs have failed to make an express certification
here. See Docket No. 99 at 6. The plaintiffs have presented
facts, however, that would plausibly support jurisdiction in New
The plaintiffs have rested their second theory of
personal jurisdiction on BSPLC’s alleged use of the New York
banking system. The thrust of the plaintiffs’ claim is that
BSPLC, a foreign bank based in the United Kingdom, transferred
funds to another foreign bank located abroad en route to
Hezbollah in Lebanon. These funds were denominated in U.S.
dollars. According to the plaintiffs’ complaint, “[p]ayment
transactions in the Eurodollar market are not typically settled
by the physical transfer of US-denominated banknotes from one
counterparty to another.” Docket No. 81 at ¶ 133. “Instead,
Eurodollar transactions are settled electronically in New York
through a bank-owned clearinghouse, and then maintained by book
entries of credits and debits in the respective counterparties’
accounting system . . . .” Id. (emphasis added). “[N]early all
U.S. dollar transfers initiated through banks outside the United
States are processed electronically by correspondent banks in
the United States, almost exclusively in New York.” Id. ¶ 139
(emphasis added). “U.S. ‘dollar clearing and settlement’ -primarily (in this case) through the Clearing House Interbank
Payments System in New York or ‘CHIPS-NY’ system and the Federal
Reserve Bank of New York (‘FRB-NY’) -- is an elaborate interbank system in the U.S. by which banks clear and settle credits
and debits in their Eurodollar accounts with other banks all
across the globe on a daily basis.” Id. ¶ 141 (emphasis added).
According to the plaintiffs, this clearing and settlement system
is critical even for purely foreign transactions between two
foreign banks when the transferred funds are denominated in U.S.
dollars. See id. ¶ 142.
Furthermore, the plaintiffs have made representations to
the Court that indicate that they believe jurisdiction is proper
in New York. In a previous filing, the plaintiffs acknowledged
that “the party invoking Rule 4(k)(2) . . . must certify that
the defendant is not subject to personal jurisdiction in any of
the fifty states,” but stated that no such certification is
possible here “because at least some of the wire transfers at
issue likely passed through New York . . . thereby subjecting
BSPLC to specific personal jurisdiction in New York.” Docket No.
59 at 10. The plaintiffs explained that even “if only a subset
of the total transfers passed through New York, BSPLC would
still be subject to personal jurisdiction there.” Id.
In their recently withdrawn 28 U.S.C. § 1407 motion before
the Judicial Panel on Multidistrict Litigation, the plaintiffs
further bolstered the case for jurisdiction in New York: “the
$50 million BSPLC transferred to Hezbollah through the U.S.
financial system was almost certainly routed through bank
accounts in New York (which is the main, if not the exclusive,
location of banks which perform such functions).” Docket No. 106
New York law has supported the exercise of personal
jurisdiction in corresponding circumstances. See Licci v.
Lebanese Canadian Bank, 984 N.E.2d 893, 901 (N.Y. 2012) (finding
personal jurisdiction over a foreign bank that maintained and
utilized a correspondent account in New York to process dollardenominated transactions similar to those at issue here).
The plaintiffs ask -- if jurisdictional discovery were to
be ordered by this Court -- to have that discovery performed in
the Eastern District of New York because another case involving
similar jurisdictional questions is already pending there. See
Docket No. 99 at 8. Notably, the plaintiffs in that case invoke
the New York long-arm statute as one basis of jurisdiction,
citing the defendants’ use of correspondent bank accounts in New
York. See Freeman v. HSBC Holdings PLC, No. 14-cv-06601-DLI-CLP
(E.D.N.Y. filed Nov. 10, 2014).
For these reasons, the Court concludes that Rule 4(k)(2) is
not a proper basis for personal jurisdiction here because there
is likely personal jurisdiction in New York.
* * *
The Court is left with two options: dismiss the case for
lack of personal jurisdiction or transfer the case to a district
where it could have been brought. Because the Court finds that
the plaintiffs’ jurisdictional allegations indicate that New
York plausibly has jurisdiction over this case, see Licci, 984
N.E.2d at 901, and because the plaintiffs request that any
jurisdictional discovery occur in the Eastern District of New
York, the Court finds that it is in the interest of justice to
transfer this case to the Eastern District of New York pursuant
to 28 U.S.C. § 1631. See Narragansett Elec. Co. v. EPA, 407 F.3d
1, 8 (1st Cir. 2005) (“28 U.S.C. § 1631 allows us to transfer a
case over which we lack jurisdiction to any other court where
the action originally could have been brought, so long as such a
transfer is in the ‘interest of justice.’”); see also Fed. Home
Loan Bank of Boston v. Moody’s Corp., 821 F.3d 102, 117 (1st
Cir. 2016) (ruling that § 1631 permits “transfer where a court
lacks either personal or subject matter jurisdiction”), cert.
denied, No. 16-180, 2016 WL 4180211 (U.S. Oct. 11, 2016).
The defendant’s motion to dismiss (Docket No. 88) is
DENIED. The case is TRANSFERRED to the Eastern District of New
York pursuant to 28 U.S.C. § 1631.
/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge
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