Lelchook et al v. Islamic Republic of Iran et al

Filing 75

Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. The defendant's motion to transfer (Docket No. 21 ) is DENIED (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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Plaintiffs,
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v.
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THE ISLAMIC REPUBLIC OF IRAN;
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THE CENTRAL BANK OF THE ISLAMIC
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REPUBLIC OF IRAN;
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BANK SADERAT IRAN; and
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BANK SADERAT, PLC,
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Defendants.
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___________________________________)
ESTER LELCHOOK, individually and
as personal representative of the
Estate of David Martin Lelchook;
MICHAEL LELCHOOK; YAEL LELCHOOK;
ALEXANDER LELCHOOK; and
DORIS LELCHOOK,

Civil Action
No. 15-13715-PBS

MEMORANDUM AND ORDER
August 9, 2016
Saris, C.J.
INTRODUCTION
This case involves the death of David Lelchook, an American
citizen, killed by a rocket fired by Hezbollah into northern
Israel during the summer of 2006. Plaintiffs, the decedent’s
relatives, allege that the defendants—Iran, the Central Bank of
the Islamic Republic of Iran, Bank Saderat Iran, and Bank
Saderat, PLC—helped funnel money to Hezbollah. Plaintiffs have
brought claims under the Foreign Sovereign Immunities Act, 28
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U.S.C. § 1602 et seq., and the Antiterrorism Act, 18 U.S.C.
§ 2331 et seq., as well as supplemental tort claims under
Israeli and Massachusetts law.
Defendant Bank Saderat, PLC (BSPLC), has moved to transfer
this case under 28 U.S.C. § 1404(a) to the District of Columbia.
After hearing and supplemental briefing, the Court concluded
that it must find that the District of Columbia has personal
jurisdiction over BSPLC before transferring the case there.
Docket No. 54. Both parties argue that the District Court for
the District of Columbia lacks personal jurisdiction over BSPLC.
Nonetheless, BSPLC maintains the equitable doctrine of judicial
estoppel provides an alternative basis for transfer. Finding
that judicial estoppel does not apply here, the Court DENIES the
defendant’s motion to transfer (Docket No. 21).
FACTUAL BACKGROUND
The following facts are undisputed unless otherwise noted.
I.

The Present Case
Between July 12 and August 14, 2006, Hezbollah1 fired

thousands of rockets into northern Israel. On August 2, 2006,
one of these rockets killed David Lelchook, a 52-year-old
American citizen, while he was riding his bicycle in Kibbutz

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Hezbollah has been designated a Specially Designated Terrorist
by the State Department since 1995, a Foreign Terrorist
Organization since 1997, and a Specially Designated Global
Terrorist since 2001.
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Saar. Plaintiffs here are the estate, widow, daughters, brother,
and mother of Mr. Lelchook.2
Defendants are 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). CBI is a political
subdivision of Iran and its central bank. BSI is a bank
incorporated in Iran and one of the country’s largest commercial
banks. At the time of the rocket attack in question, BSI was
wholly owned and controlled by the Iranian government.3 BSPLC is
a bank incorporated in England and Wales, and is a wholly-owned
subsidiary of BSI. The plaintiffs allege—and BSPLC disputes—that
the defendants provided extensive, material support and
resources to Hezbollah that enabled it to fire the rocket that
killed Mr. Lelchook. Specifically, the plaintiffs assert that
Iran utilizes CBI, BSI, and BSPLC to transfer funds to its
terrorist proxies, including Hezbollah.
The plaintiffs’ complaint alleges seven separate counts.
Counts I and II are against Iran and CBI, and allege violations

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Ester Lelchook is the widow of Mr. Lelchook and personal
representative of his estate. Michal and Yael Lelchook are Mr.
Lelchook’s daughters. Alexander Lelchook is Mr. Lelchook’s
brother and a resident of Acton, Massachusetts. Doris Lelchook
is Mr. Lelchook’s mother and a resident of Newton Upper Falls,
Massachusetts.
3 Defendants BSI and BSPLC have previously asserted that Iran has
owned less than half of BSI’s shares since 2009. See Kaplan v.
Cent. Bank of the Islamic Republic of Iran, 961 F. Supp. 2d 185,
198 (D.D.C. 2013).
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of the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et
seq. (FSIA). Counts III and IV are against BSI and BSPLC, and
allege violations of the Antiterrorism Act, 18 U.S.C. § 2331 et
seq. (ATA). Counts V and VI are against all four defendants, and
allege violations of Israeli tort law. Count VII is against all
four defendants, and alleges a violation of Massachusetts tort
law.
Plaintiffs have attempted service on all four defendants.
BSPLC is the sole defendant moving to transfer venue. None of
the other defendants answered or filed any other motion. The
Clerk has entered notices of default as to BSI (Docket No. 44)
and CBI (Docket No. 65). The Court has not entered a default
judgment against any defendant.
II.

The D.C. Litigation
On July 9, 2010, the same plaintiffs sued the same

defendants over the death of the same individual in 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 sued the same four defendants: Iran,
CBI, BSI, and BSPLC. See Kaplan v. Cent. Bank of the Islamic
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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. The plaintiffs brought FSIA, ATA, and Israeli
tort law claims. Id. At 190-91. The court dismissed all claims
against BSPLC and BSI, including the same 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 Kaplan court rested its holding on the ATA’s “act of
war” exception. Id. at 199-201. The ATA precludes liability for
an “act of war.” 18 U.S.C. § 2336(a) (“No action shall be
maintained . . . for injury or loss by reason of an act of
war.”). Section 2331(4)(C) defines an “act of war” as “any act
occurring in the course of . . . armed conflict between military
forces of any origin.” The court concluded that Israel and
Hezbollah were engaged in “armed conflict” during the 34-day
cross-border fighting in July and August of 2006, and that the
rocket attacks were launched “in the course of” that conflict.
Kaplan, 961 F. Supp. 2d at 203. The court then decided that, at
least in the context of these attacks, Hezbollah was a “military
force” for purposes of § 2331(4)(C). Id. at 204. The court
acknowledged that Hezbollah is also a terrorist group, but that
here it engaged in “sustained combat” with Israel’s military and
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provoked that military’s invasion of Lebanon, “ultimately
agreeing to a U.N.-brokered cease fire with” Israel’s military.
Id. at 204. In that context, Hezbollah—which can alternatively
be described as a “non-national paramilitary force, a terrorist
group, and a part of the Lebanese government”—was a “military
force” during the Israel-Lebanon war. Id. Having determined the
applicability of the ATA’s “act of war” exception, the Kaplan
court then dismissed the plaintiffs’ claims against BSPLC. Id.
The court did not discuss whether it had personal jurisdiction
over any of the defendants.
Citing its decision in Kaplan, the Lelchook I court
dismissed “all of plaintiffs’ claims against defendants BSI and
BSPLC.” 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.4 It did not address personal
jurisdiction.
DISCUSSION
I.

Parties’ Arguments
Although BSPLC offers a compelling argument that it is not

subject to personal jurisdiction in the District of Columbia, it

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The court later dismissed without prejudice the plaintiffs’
claims against Iran and CBI for failure to prosecute. Lelchook
v. Central Bank of the Islamic Republic of Iran, Civ. No. 101184 (RCL) (D.D.C. Aug. 26, 2015).
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contends that the case can still be transferred there pursuant
to § 1404 because the plaintiffs are judicially estopped from
challenging personal jurisdiction given that they previously
filed this suit in that district. The plaintiffs respond that
judicial estoppel does not apply for two reasons.
First, the D.C. district court did not accept any
representation by the plaintiffs that the court could exercise
personal jurisdiction over BSPLC. The plaintiffs note that the
Lelchook I court did not address personal jurisdiction in its
dismissal. The plaintiffs emphasize that the Lelchook I court
instead dismissed BSPLC on the basis of the “act of war”
exception and did so before BSPLC was served in the suit or had
an opportunity to file a 12(b)(2) motion to dismiss.
Second, the plaintiffs argue that, even if their position
is deemed directly inconsistent with their filing this suit in
the District of Columbia, the about-face is justified by the D.C
district court’s subsequent decision in Wultz v. Islamic
Republic of Iran, 762 F. Supp. 2d 18 (D.D.C. 2011). In Wultz, an
ATA case involving a terrorist bombing in Tel Aviv, the district
court held that the plaintiffs could invoke the ATA’s nationwide
service of process provision to establish personal jurisdiction
only if they also complied with the ATA’s venue provision. Id.
at 25-26. Finding that plaintiffs had not satisfied the venue
provision, and that the Bank of China did not have sufficient
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minimum contacts with the District of Columbia, the court held
that it lacked personal jurisdiction over the bank. Id. at 31.
II.

Legal Standard
“The doctrine of judicial estoppel is equitable in nature.”

Perry v. Blum, 629 F.3d 1, 8 (1st Cir. 2010). It “prevents a
litigant from pressing a claim that is inconsistent with a
position taken by that litigant either in a prior legal
proceeding or in an earlier phase of the same legal proceeding.”
InterGen N.V. v. Grina, 344 F.3d 134, 144 (1st Cir. 2003).
“Where one succeeds in asserting a certain position in a legal
proceeding, one may not assume a contrary position in a
subsequent proceeding simply because one’s interests have
changed.” Guay v. Burack, 677 F.3d 10, 16 (1st Cir. 2012). “The
doctrine’s primary utility is to safeguard the integrity of the
courts by preventing parties from improperly manipulating the
machinery of the judicial system.” Alt. Sys. Concepts, Inc. v.
Synopsys, Inc., 374 F.3d 23, 33 (1st Cir. 2004).
“The contours of judicial estoppel are hazy,” Perry, 629
F.3d at 8, but “[t]here are two generally agreed-upon conditions
for the application of judicial estoppel.” Guay, 677 F.3d at 16.
“First, the estopping position and the estopped position must be
directly inconsistent, that is, mutually exclusive.” Id.
(quoting Alt. Sys. Concepts, 374 F.3d at 33). “Second, the
responsible party must have succeeded in persuading a court to
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accept its prior position.” Id. (quoting Alt. Sys. Concepts, 374
F.3d at 33). “There is also a third oft-considered factor that
asks ‘whether the party seeking to assert an inconsistent
position would derive an unfair advantage or impose an unfair
detriment on the opposing party if not estopped.’” Id. (quoting
New Hampshire v. Maine, 532 U.S. 742, 751 (2001)). “Where unfair
advantage exists, however, it is a powerful factor in favor of
applying the doctrine.” Id. at 16-17. “The presence of these
elements creates the appearance that either the first court has
been misled or the second court will be misled, thus raising the
specter of inconsistent determinations and endangering the
integrity of the judicial process.” Alt. Sys. Concepts, 374 F.3d
at 33. “[I]n a prototypical case, judicial estoppel applies when
‘a party has adopted one position, secured a favorable decision,
and then taken a contradictory position in search of legal
advantage.’” Id. (quoting InterGen, 344 F.3d at 144).
“[I]n limited circumstances, courts have recognized a good
faith exception to the operation of judicial estoppel.” Id. at
35. “For example, that exception may be available if the
responsible party shows that the new, inconsistent position is
the product of information neither known nor readily available
to it at the time the initial position was taken.” Id.

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III. Analysis
At first glance, this case may appear to be a candidate for
judicial estoppel: the plaintiffs filed this same suit in the
District of Columbia, lost on the merits, and now—in opposing
transfer under § 1404—argue that the case could not have been
brought in that same district in the first place. Although there
are obvious concerns about forum shopping, the Court finds that
judicial estoppel does not apply here.
The first factor is met: the plaintiffs’ positions are
directly inconsistent. The plaintiffs concede as much. In filing
this suit in the District of Columbia, the plaintiffs invited
the district court to exercise personal jurisdiction over BSPLC.
Now that BSPLC seeks to transfer the case to that same district,
the plaintiffs have taken a different tack.
The plaintiffs maintain, however, that while their “current
position may be inconsistent with their prior position that
BSPLC was subject to personal jurisdiction in D.C.,” judicial
estoppel does not apply because the law changed between the
filing of this case in D.C. in 2010 and the re-filing of it here
in 2015. Docket No. 59 at 8; see Boston Gas Co. v. Century
Indem. Co., 708 F.3d 254, 263 (1st Cir. 2013) (noting that a
“subsequent change in governing law” may excuse a change in a
party’s legal positions). The change in governing law to which
the plaintiffs refer is the D.C. district court’s decision in
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Wultz v. Islamic Republic of Iran, 762 F. Supp. 2d 18 (D.D.C.
2011).
Wultz does not justify the plaintiffs’ change in position.
In Wultz, the defendant had offices in the United States and was
served in the United States. The issue was whether the
plaintiffs could establish personal jurisdiction under the ATA
solely by serving the defendant within the United States,
therefore complying with the Act’s nationwide service of process
provision, or whether they were also required to comply with the
ATA’s venue provision. Wultz, 762 F. Supp. 2d at 27 (“The issue
before the Court is not whether this action is properly venued;
the issue is whether plaintiffs may invoke the ATA’s grant of
nationwide service without first satisfying the specific venue
conditions set forth in the ATA.”); see also 18 U.S.C. § 2334(a)
(“Any civil action under section 2333 of this title against any
person may be instituted in the district court of the United
States for any district where any plaintiff resides or where any
defendant resides or is served, or has an agent. Process in such
a civil action may be served in any district where the defendant
resides, is found, or has an agent.”).
The court held that the plaintiffs must do both: serve the
defendant in accordance with the nationwide service of process
provision and initiate the suit in a district in which venue is
proper. Wultz, 762 F. Supp. 2d at 25-26 (“[I]nvocation of the
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ATA’s provision of nationwide service of process rests on the
satisfaction of its venue clause.”). Wultz pertains only to
cases in which the ATA’s nationwide service of process provision
provides for personal jurisdiction. Wultz says nothing about the
scenario here, where the defendant is served abroad. Wultz does
not excuse the plaintiffs’ inconsistent positions.
The plaintiffs, however, have a much stronger argument with
respect to the second requirement: there is no indication that
the D.C. district court adopted the plaintiffs’ position that it
had personal jurisdiction over BSPLC. When the court dismissed
BSPLC, it did so without mentioning personal jurisdiction and
before BSPLC was served. The issue of personal jurisdiction
therefore had not been briefed. Nor was it adjudicated. On this
basis, the Court declines to apply the equitable doctrine of
judicial estoppel.
Another reason counsels against estoppel in this context:
judicial efficiency. BSPLC requests that the Court bind the
plaintiffs to their original position—that personal jurisdiction
was proper in the District of Columbia—so that the case may be
transferred there. But the defendant does not agree to defend
this suit in the District of Columbia either. Upon transfer,
BSPLC will argue that the transferee court lacks personal
jurisdiction over it. See Docket No. 21, Ex. 1 at 8 n.4 (“BSPLC,
a British bank doing no business in the United States, asserted
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(and continues to claim here) a lack of jurisdiction over it in
Kaplan or otherwise in U.S. courts. The Court in Kaplan did not
have to address the issue since BSPLC was dismissed entirely on
other grounds. . . . BSPLC [maintains here] that there is no
jurisdiction over it in this Court or in any other courts in the
U.S.”). The Court will not facilitate this fool’s errand.
While the plaintiffs may be “playing fast and loose with
the courts,” see Alt. Sys. Concepts, 374 F.3d at 31, filing this
case three times—initially in the District of Columbia in 2010,
again in the District of Columbia in 2014, and finally in this
District in 2015—the Court holds that judicial estoppel is not
warranted here because the plaintiffs did not succeed “in
persuading a court to accept [their] earlier position” that the
D.C. district court had personal jurisdiction over BSPLC. See
Perry, 629 F.3d at 9.
***
The Court has already received briefing and heard argument
on the issue of whether this Court has personal jurisdiction
over BSPLC. And yet BSPLC has not actually filed a 12(b)(2)
motion to dismiss for lack of personal jurisdiction. Any motions
to dismiss for lack of personal jurisdiction shall be filed
within fourteen days of this order. Because both parties have
briefed the issue extensively, the defendant’s accompanying

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brief and the plaintiffs’ opposition are limited to ten pages
each. No replies may be filed.
ORDER
The defendant’s motion to transfer (Docket No. 21) is
DENIED.

/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge

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