Wultz et al v. Bank of China Limited

Filing 119

OPINION AND ORDER denying re: #100619 #110 MOTION CONCERNING THE CHOICE OF LAW GOVERNING PLAINTIFFS NON-FEDERAL CLAIMS, filed by Bank of China Limited. The parties are instructed to brief the Construction of Foreign Law Motion. Plaintiffs, as moving party, should submit their brief within 28 days of this Order. BOC's response is due 21 days later and plaintiffs' reply will be due 14 days after that. (Signed by Judge Shira A. Scheindlin on 8/3/11) (cd) Modified on 8/9/2011 (jab). (Main Document 119 replaced on 8/10/2011) (ft).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

----------------------------------------------------- )(
SHERYL WULTZ, individually, as
personal representative of the Estate of
Daniel Wultz, and as the natural
guardian of plaintiff Abraham Leonard
Wultz, YEKUTIEL WULTZ,
individually, as personal representative
of the Estate of Daniel Wultz, and as the
natural guardian of plaintiff Abraham
Leonard Wultz, AMANDA WULTZ, and:
ABRAHAM LEONARD WULTZ, minor, :
by his next friends and guardians
Sheryl Wultz and Yekutiel Wultz,

OPINION AND ORDER
11 Civ. 1266 (SAS)

Plaintiffs,

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BANK OF CHINA LIMITED,

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Defendant.

----------------------------------------------------- )(
SHIRA A. SCHEINDLIN, U.S.D.J.:

I.

INTRODUCTION
This suit arises out of the death of Daniel Wultz, and the injuries of

Yekutiel Wultz, suffered in a 2006 suicide bombing in Tel Aviv, Israel. Four
members of the Wultz family bring this suit against Bank of China ("BOC"),
alleging acts of international terrorism and aiding and abetting international

1

terrorism under the Antiterrorism Act (“ATA”),1 as well as negligence, breach of
statutory duty, and vicarious liability under Israeli law. BOC moves the Court to
apply New York, rather than Israeli, law to plaintiffs’ non-federal claims. For the
reasons discussed below, defendant’s motion is denied.
II.

BACKGROUND
On April 17, 2006, the Palestinian Islamic Jihad (“PIJ”) carried out a

suicide bombing in Tel Aviv, Israel,2 severely injuring sixteen-year-old Daniel
Wultz and his father, Yekutiel Wultz, both Florida residents.3 Daniel Wultz died
of his injuries on May 14, 2006.4 The attack killed ten others and injured many
more.5
The PIJ, a radical terrorist organization founded in the Gaza Strip in
the early 1980s,6 seeks “the creation of an Islamic state in the territory of Israel, the
West Bank and the Gaza Strip, and the destruction of the state of Israel and the

1

See 18 U.S.C. § 2333.

2

See First Amended Complaint (“FAC”) ¶¶ 1-2.

3

See id. ¶ 3.

4

See id.

5

See id. ¶ 85.

6

See id. ¶ 26.
2

murder or expulsion of its Jewish residents.”7 Since its founding, the PIJ has
committed thousands of terrorist acts, killing numerous American and Israeli
citizens.8 Consequently, the PIJ had been designated by the United States
Government as a Foreign Terrorist Organization and a Specially Designated Global
Terrorist,9 and is therefore subject to stringent economic sanctions.10
The American-imposed sanctions regime seeks to “prevent PIJ from
conducting banking activities and thereby limit its ability to plan, prepare and [ ]
carry out terrorist attacks.”11 According to plaintiffs, however, BOC has not
complied with those regulations.12 Between 2003 and the 2006 attack, BOC
facilitated dozens of wire transfers, totaling millions of U.S. dollars, for the PIJ.13
Most of the transactions were initiated at a BOC branch in Guangzhou, China, in
the name of “S.Z.R[.] Alshurafa,” from an account owned by a PIJ leader named

7

Id. ¶ 27.

8

See id. ¶¶ 28-30.

9

See id. ¶ 31.

10

See id. ¶ 63.

11

Id. ¶ 64.

12

See id. ¶ 68.

13

See id. ¶ 69.
3

Said al-Shurafa.14 Other transfers were made by way of BOC branches in the
United States to another of Shurafa’s accounts.15 Plaintiffs allege that these
transfers were instrumental in helping the PIJ to plan and execute terrorist
attacks.16
In April 2005, Israeli security officers informed Chinese security and
bank officials of exactly why the PIJ transfers were being made and of the impact
the transfers had on the PIJ’s terrorist activities.17 Later that month, Chinese
officials alerted the BOC leadership that Israeli officials had requested that BOC
halt the transfers.18 Plaintiffs aver that BOC ignored these warnings and
demands.19 Plaintiffs therefore allege that “[a]t all times, BOC had actual
knowledge that the PIJ transfers were being made by the PIJ for the purpose of
carrying out terrorist attacks.”20 Further, plaintiffs contend that regardless of the
warning from Israeli officials, BOC “knew or should have known that the PIJ

14

Id.

15

See id.

16

See id. ¶ 74.

17

See id. ¶¶ 74, 77.

18

See id. ¶ 77.

19

See id.

20

Id.
4

transfers were being made for illegal purposes because BOC had and has statutory
duties,”21 specifically to follow rules promulgated by the United States’ Financial
Action Task Force.22
The Wultz family originally filed suit in the U.S. District Court for the
District of Columbia, against the Islamic Republic of Iran and several of its
leaders, the Syrian Arabic Republic and several of its leaders, as well as BOC.23
That court denied BOC’s motion to dismiss,24 but on reconsideration,
acknowledged that it lacked personal jurisdiction over the Bank, severed the claims
against BOC from the others, and transferred the case here.25 In April, I denied
BOC’s request to reconsider its motion to dismiss, but ordered briefing on choice
of law.26
III.

APPLICABLE LAW
A.

Waiver

21

Id. ¶ 80.

22

See id.

23

See generally FAC.

24

See Wultz v. Islamic Republic of Iran, 755 F. Supp. 2d 1 (D.D.C.

2010).
25

See Wultz v. Islamic Republic of Iran, 762 F. Supp. 2d 18, 20 (D.D.C.

2011).
26

See Transcript of 4/04/11 Conference (“4/04/11 Tr.”), at 7, 36.
5

When a party assumes in its briefs that a particular jurisdiction’s law
applies, it gives “‘implied consent [. . .] sufficient to establish choice of law,’”27 at
least unless “strong countervailing public policy” suggests otherwise.28 Courts,
though, do not generally hold the choice-of-law determination to have been waived
until a late stage in litigation, such as at the point of making of summary judgment
motions.29 Furthermore, in contrast to appellate courts, district courts are not

27

Santalucia v. Sebright Transp., Inc., 232 F.3d 293, 296 (2d Cir. 2000)
(quoting Tehran-Berkeley Civil & Envtl. Eng’rs v.
Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239, 242 (2d Cir. 1989) (“[I]mplied
consent to use a forum’s law is sufficient to establish choice of law. . . .”). Accord
International Bus. Mach. Corp. v. Liberty Mut. Fire Ins. Co., 303 F.3d 419, 423
(2d Cir. 2002); Bluestein & Sander v. Chicago Ins. Co., 276 F.3d 119, 121-22 (2d
Cir. 2002); Larsen v. A.C. Carpenter, Inc., 620 F. Supp. 1084, 1103 (E.D.N.Y.
1985), aff’d, 800 F.2d 1128 (2d Cir. 1986).
28

Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d

Cir. 1984).
29

See Santalucia, 232 F.3d 293 (finding waiver when adjudicating fee
dispute after the settlement of an underlying suit); Tehran-Berkeley Civil & Envtl.
Eng’rs, 888 F.2d 239 (finding waiver on appeal for the second time); International
Bus. Mach. Corp., 303 F.3d 419 (finding waiver during appeal from summary
judgment); Bluestein & Sander, 276 F.3d 119 (finding waiver during appeal from
summary judgment); Larsen, 620 F. Supp. 1084 (finding waiver in bench trial
opinion). The same principle is found in the cases cited by plaintiffs. See, e.g.,
CSX Transp., Inc. v. Commercial Union Ins. Co., 82 F.3d 478 (D.C. Cir. 1996)
(finding waiver during appeal from summary judgment); Muslin v. Frelinghuysen
Livestock Managers, Inc., 777 F.2d 1230, 1231 n.1 (7th Cir. 1985) (finding waiver
at a “late point in this litigation”); Farm Credit Bank of Texas v. Fireman’s Fund
Ins. Co., 822 F. Supp. 1251, 1258 (W.D. La. 1993), aff’d, 50 F.3d 1033 (5th Cir.
1995) (finding waiver on summary judgment).
6

required to consider arguments on a strict timetable.30 Rather, “in most cases trial
judges can provide parties with an adequate opportunity to respond to particular
arguments by ordering additional briefing or an extra round of oral argument.”31
B.

Conflict of Laws
When exercising supplemental jurisdiction over state law claims,

federal courts follow the choice of law rules of the forum state to determine the
controlling substantive law.32 In New York, “‘the first question to resolve in
determining whether to undertake a choice of law analysis is whether there is an
actual conflict of laws.’”33 “In the absence of substantive difference . . . a New
York court will dispense with choice of law analysis; and if New York law is

30

See Booking v. General Star Mgmt. Co., 254 F.3d 414, 418 (2d Cir.
2001) (“The courts of appeals generally do not consider arguments raised for the
first time in reply briefs because, inter alia, such is the dictate of Rule 28(a) of the
Federal Rules of Appellate Procedure . . . . These considerations, however, do not
apply with full force in a district court. Rule 28 of the Federal Rules of Appellate
Procedure, for example, has no analogue in the Federal Rules of Civil Procedure . .
.”).
31

Id.

32

See Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir. 1989) (citing
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941)).
33

Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir.
2001) (quoting Curley v. AMR Corp., 153 F.3d 5, 11 (2d Cir. 1998)).
7

among the relevant choices, New York courts are free to apply it.”34
C.

Choice of Law
To resolve conflicts in tort cases, New York applies an “interest

analysis” to identify the jurisdiction that has the greatest interest in the litigation
based on the occurrences within each jurisdiction, or contacts of the parties with
each jurisdiction, that “‘relate to the purpose of the particular law in conflict.’”35
Under the interest-analysis test, torts are divided into two types,
those involving the appropriate standards of conduct, rules of
the road, for example and those that relate to allocating losses
that result from admittedly tortious conduct . . . such as those
limiting damages in wrongful death actions, vicarious liability
rules, or immunities from suit.36
“Conduct-regulating rules have the prophylactic effect of governing
conduct to prevent injuries from occurring.”37 When such rules are at issue, the

34

International Bus. Mach. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137,
143 (2d Cir. 2004).
35

GlobalNet Financial.com, 449 F.3d at 384 (quoting Schultz v. Boy
Scouts of Am., Inc., 65 N.Y.2d 189, 197 (1985)). Accord Finance One Pub. Co. v.
Lehman Bros. Special Fin., Inc., 414 F.3d 325, 337 (2d Cir. 2005) (citation
omitted) (explaining that the interest analysis is a “flexible approach intended to
give controlling effect to the law of the jurisdiction which, because of its
relationship or contact with the occurrence or the parties, has the greatest concern
with the specific issue raised in the litigation”).
36

GlobalNet Financial.com, 449 F.3d at 384 (quotation marks and
citations omitted).
37

Padula v. Lilarn Props. Corp., 84 N.Y.2d 519, 522 (1994).
8

law of the place of the tort — commonly known as lex loci delicti — “will
generally apply because that jurisdiction has the greatest interest in regulating
behavior within its borders.”38 “For claims sounding in negligence, courts
generally apply the law of the state where the injury is suffered, rather than the
state where the negligent conduct occurred.”39 This test — looking to the location
of the “last event necessary” to make a party liable — “however is not dispositive.
. . . Rather, courts must still conduct an interest analysis.”40 Cases arising out of
acts of terror present a strong case for departing from the last-event necessary
test.41 The same is true of cases involving international business dealings.42
38

Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993).

39

HSA Residential Mortg. Servs. of Texas v. Casuccio, 350 F. Supp. 2d
352, 364 (E.D.N.Y. 2003) (citing Schultz, 65 N.Y.2d at 195).
40

Id.

41

Cf. In re Sept. 11th Litig., 494 F. Supp. 2d 232, 239 (S.D.N.Y. 2007)
(quoting Pescatore v. Pan Am. World Airways, Inc., 97 F.3d 1, 13 (2d Cir. 1996))
(“For claims arising out of a ‘disaster befalling a plane aloft,’ however, ‘the place
of the crash is often random or, as here, fixed by a warped mind,’ and thus
legitimate reasons to deviate from the lex loci delicti rule may exist.”). To be sure,
a case arising out of an act of terror involving an airplane presents an especially
strong case for a departure from last-event necessary, given that the place of the
crash may be random. In contrast, a terrorist bombing such as the one at issue in
the instant litigation may be “fixed by a warped mind,” but it was nevertheless
specifically chosen and was not in any way random.
42

See LaSala v. TSB Bank, PLC, 514 F. Supp. 2d 447, 465-66 (S.D.N.Y.
2007) (“A situation such as this, where the alleged misconduct occurred in one
jurisdiction, but because of the international nature of a company’s business
9

Nevertheless, “in tort cases involving personal injury and property damage, the
doctrine of lex loci delicti governs except in ‘extraordinary circumstances.’”43 In
the end, “[i]f the choice of law analysis leads to the application of foreign law, a
court may refuse to apply that law only if its application would be violative of
fundamental notions of justice or prevailing concepts of good morals.”44
Other courts have outlined several considerations that are useful in an
interest analysis. Generally speaking, a jurisdiction has an interest in “protecting
the reasonable expectations of the parties who relied on” that jurisdiction’s law in
orienting their conduct.45 More specifically, when a U.S. citizen falls victim to a
terrorist attack, “the United States has a ‘unique interest’ in having its domestic law
apply.”46 In fact, the United States has a “profound and compelling interest in
dealings the harm caused by that misconduct was felt in another country, presents
precisely the sort of circumstance where a blind adherence to the rule that the last
place determines the locus of the tort and therefore the jurisdiction with the
greatest interest would result in the jurisdiction which does not possess the greatest
interest being deemed so for choice[-]of[-]law purposes.”).
43

Campbell v. Goodyear Tire & Rubber Co., No. 83 Civ. 6282, 1985
WL 1514, at *1 (S.D.N.Y. June 3, 1985) (quoting Cousins v. Instrument Flyers,
Inc., 44 N.Y.2d 698, 699 (1978)).
44

Curley, 153 F.3d at 12 (citing Brink’s Ltd. v. South African Airways,
93 F.3d 1022, 1031 (2d Cir. 1996)).
45

Hamilton v. Accu-Tek, 47 F. Supp. 2d 330, 337 (E.D.N.Y. 1999).

46

Kirschenbaum v. Islamic Republic of Iran, 572 F. Supp. 2d 200, 210
(D.D.C. 2008).
10

combating terrorism at every level, including disrupting the financial
underpinnings of terrorist networks,” especially when the network’s financial
underpinnings rely upon U.S. financial institutions.47 Of course, when it comes to
terrorism, a jurisdiction’s interest in having its law applied is heightened when its
citizens comprise the majority of those injured and when its property bears the
brunt of the damage.48 A locale’s interest is also heightened when its citizens were
specifically targeted by terrorists.49
Congress has articulated the United States’ strong interest in

47

Strauss v. Credit Lyonnais, S.A., 249 F.R.D. 429, 443-44 (E.D.N.Y.

2008).
48

See, e.g., In re Sept. 11th Litig., 494 F. Supp. 2d at 240 (“Several
thousand New Yorkers were killed, and billions of dollars of New York property
was destroyed. New York, rather than the several domiciles of the passengers on
board Flights 11 and 175, or of the defendants who were sued in connection with
their involvement in those flights, has the greatest interest in applying its
conduct-regulating law.”); In re Ski Train Fire in Kaprun, Austria on Nov. 11,
2000, 230 F. Supp. 2d 376, 390-91 (S.D.N.Y. 2002) (“[N]ot only is Austria the
locus of the tort, but it is clear that Austria has the far greater interest in this
litigation — many if not most of the 155 victims were Austrian, the safety of
Austria’s transportation systems is implicated, and the defendants committed much
of the alleged wrongful conduct within Austria’s borders.”).
49

See Oveissi v. Islamic Republic of Iran, 573 F.3d 835, 842-43 (D.C.
Cir. 2009) (“But [the victim] was not an American national; nor has the plaintiff
suggested that the defendants knew Oveissi had an American grandchild or that the
United States or its nationals were in any other way the object of the attack.”).
11

compensating American victims of terrorism.50 In passing the ATA,
“Congress has explicitly granted private parties the right to pursue
common [law] tort claims against terrorist organizations and those
that provide material support or financing to terrorist
organizations . . . . [P]rivate tort actions directed at compensating
victims of terrorism and thwarting the financing of terrorism
vindicate the national and international public interest.”51
Additionally, when a bank’s conduct is challenged, that bank’s corporate domicile,
or at least the location where its allegedly tortious acts took place, also has a keen
interest in applying its laws.52 Finally, courts have considered the fact that injuries
are often felt in a place different from where the attack was executed and have

50

See Weiss v. National Westminster Bank, PLC, 242 F.R.D. 33, 50
(E.D.N.Y. 2007).
51

Estates of Ungar ex rel. Strachman v. Palestinian Auth., 715 F. Supp.
2d 253, 268 (D.R.I. 2010) (quoting Weiss, 242 F.R.D. at 50).
52

See Sussman v. Bank of Israel, 801 F. Supp. 1068, 1075 (S.D.N.Y.
1992), aff’d, 990 F.2d 71 (2d Cir. 1993) (“[P]laintiffs challenge the integrity of the
[defendants’, including the Bank of Israel’s,] conduct. That conduct took place in
Israel. Whether or not defendants’ conduct was tortious will be measured by the
law of Israel. It is that law upon which the parties, plaintiffs and defendants alike,
relied in respect of defendants’ conduct; and the interest of Israel in applying its
law to admonish or prevent similar conduct in the future assumes a critical and, in
my opinion, controlling importance in choice of law analysis.”); LaSala, 514 F.
Supp. 2d at 465-66 (“Switzerland’s interest in regulating the conduct of banks
within its borders, particularly where the bank is a leading financial services
provider in the country, is great. The reputability of the country’s banking system
is intimately connected to the effectiveness of the country’s regulation of its
banks.”).
12

accounted for the interests of that particular location.53
IV.

DISCUSSION
A.

BOC Has Not Waived Its Right to Argue for the Application of
New York Law
Plaintiffs argue that because BOC did not dispute the application of

Israeli law in its motion to dismiss, BOC has waived its right to argue for the
application of New York law. This contention misstates BOC’s position in its
brief. BOC wrote:
The FAC does not explain why the Plaintiffs chose to allege
statutory causes of action under Israeli law, rather than bringing
this case under the law of the domicile (Florida) or the law of this
District, where they chose to file the action. However, this choice
is of no moment because the law of Israel, which is conceptually
similar to U.S. common law standards of duty, forseeability[,] and
causation, forecloses all of Plaintiffs’ Israeli law claims.54
Thus, while BOC noted that plaintiffs’ choice of law was curious, it elected to
argue that the claims should be dismissed under any jurisdiction’s law.
Subsequently, the D.C. District Court recognized that at least one of plaintiffs’
53

See Wyatt v. Syrian Arab Republic, 398 F. Supp. 2d 131, 145 (D.D.C.
2005), aff’d, 266 F. App’x 1 (D.C. Cir. 2008) (“Though the actual abduction took
place in Turkey, the plaintiffs also seek recovery for injuries suffered by the family
members of Wyatt and Wilson, including emotional distress and damages for
consortium and solatium as a result of their kidnaping, injuries which the plaintiffs
suffered while in the United States.”).
54

Defendant’s Memorandum of Points and Authorities in Support of
Defendant Bank of China Limited’s Motion to Dismiss the FAC, at 30.
13

claims was a “unique” cause of action55 and then transferred the case to this Court,
triggering the application of New York choice of law rules and making the
application of New York substantive law possible. Now, with the understanding
that there may be a conflict of laws, and because new choice of law rules apply,
BOC has chosen to assert its choice of law position. Furthermore, this litigation is
in its infancy. BOC raised the issue in April 2011 at one of the first conferences
before this Court.56 Accordingly, plaintiffs’ request that the Court not even
consider BOC’s motion is denied.
B.

A Substantive Conflict Exists Between New York and Israeli Law
With respect to each of plaintiffs’ non-federal claims, there exists a

substantive conflict of laws. While neither party formally disputes the conflict’s
existence,57 I present a brief summary of the differences before proceeding.
1.

Negligence

The basic elements of negligence are the same under New York and
55

See Wultz, 755 F. Supp. 2d at 80 (“Although plaintiffs caption their
claim under [Israel’s Civil Wrongs Ordinance (“CWO”)] § 12 as one for ‘vicarious
liability,’ liability of a defendant under § 12 is unique. . . .”).
56

See generally 4/04/11 Tr.

57

BOC contends that plaintiffs cannot recover under any set of laws, but
for the purposes of this motion, assumes the existence of an “arguable conflict.”
See Memorandum in Support of Bank of China’s Motion Concerning the Choice of
Law Governing Plaintiffs’ Non-Federal Claims (“Def. Mem.”), at 3-7.
14

Israeli law.58 New York, however, does not impose upon banks a duty to shield
non-customers from intentional torts committed by customers,59 while there is at
least an argument that Israel does.60 BOC will almost certainly contest the
existence of such a duty under Israeli law.61

58

See Licci v. American Exp. Bank Ltd., 704 F. Supp. 2d 403, 409
(S.D.N.Y. 2010) (“[N]o actual conflict exists between the applicable substantive
law of negligence in New York and Israel.”).
59

See In re Terrorist Attacks on Sept. 11, 2001, 349 F. Supp. 2d 765,
830 (S.D.N.Y. 2005), on reconsideration in part, 392 F. Supp. 2d 539 (S.D.N.Y.
2005), aff’d, 538 F.3d 71 (2d Cir. 2008) (“Banks do not owe non-customers a duty
to protect them from the intentional torts of their customers.”). See also Burnett v.
Al Baraka Inv. & Dev. Corp., 274 F. Supp. 2d 86, 109 (D.D.C. 2003) (“Plaintiffs
offer no support, and we have found none, for the proposition that a bank is liable
for injuries done with money that passes through its hands in the form of deposits,
withdrawals, check clearing services, or any other routine banking service.”);
Century Bus. Credit Corp. v. North Fork Bank, 668 N.Y.S.2d 18, 19 (1st Dep’t
1998) (“[T]o hold that banks owe a duty to their depositors’ creditors to monitor
the depositors’ financial activities so as to assure the creditors’ collection of the
depositors’ debts would be to unreasonably expand banks’ orbit of duty.”).
60

See Affidavit of Robert J. Tolchin, Submitted in Elmaliach v. Bank of
China, Ex. A to Declaration of Mitchell R. Berger (“Berger Decl.”), ¶ 20 (quoting
C.A. 906801 Ayalon Insurance Co. Ltd. v. The Executor of the Estate of Haya
Ofelger, 59(2) P.D. 349) (“[T]he trend in Israeli law insofar as pertains to the duty
of care imposed on the banks is an expansive trend . . . and in certain cases, the
Court has recognized the tortious liability of a bank based on the tort of negligence,
also to third parties who are not the bank’s customers . . . . According to these
standards, the bank is subject to the duty of foreseeing that its negligence would
cause damage to a third party, even if said third party is not its customer, and the
bank is required to take a reasonable level of care in order to prevent this.”).
61

In the parallel state action brought by Israeli victims of the same
attack, the New York Supreme Court recently held that “the specific allegations
15

2.

Breach of Statutory Duty and Vicarious Liability

A choice of law analysis is required when a party relies upon “a
number of provisions of [foreign] substantive law that are potentially decisive and
that have no New York law equivalent.”62 Here, plaintiffs’ breach of statutory duty
claim, itself a provision of the Israeli CWO, is premised upon the violation of at
least three Israeli Acts.63 Similarly, as the Court pointed out earlier in this
litigation, the claim labeled vicarious liability
should be distinguished from ordinary joint and several liability as well
as from vicarious liability of an employer or principal for the actions of
his employee or agent, which are dealt with elsewhere in the CWO. . . .
Although plaintiffs caption their claim under § 12 as one for “vicarious
liability,” liability of a defendant under § 12 is unique: “there is no
prerequisite that the other person, which actually inflicted the loss, be

regarding BOC’s actual knowledge of Shurafa’s terrorist activities sufficiently
distinguishes the Complaints herein from the pleading in Licci and takes it outside
the usual rule that ‘[b]anks do not owe non-customers a duty to protect them from
intentional torts committed by their customers.’” Elmaliach v. Bank of China, Ltd.,
No. 102026/09 (quoting Licci, 704 F. Supp. at 410). Plaintiffs use this passage to
argue that there is no longer a substantive conflict-of-laws. While Elmaliach
certainly bolsters plaintiffs’ case, I cannot conclude, on the basis of one decision
by the lowest state court, that relevant Israeli and New York laws are in harmony.
62

Finance One Pub. Co. Ltd., 414 F.3d at 332.

63

See FAC ¶¶ 141-152. See also Wultz, 755 F. Supp. 2d at 79 (“The
elements of Israel’s [breach of statutory duty tort] are clear. They include the
violation of duty imposed by an Israeli enactment, including Israeli penal laws, not
any other nation[’s] penal laws.”).
16

personally liable for the commission of a tort.”64
As such, both the breach of statutory duty and vicarious liability claims rely
exclusively on unique foreign laws and therefore trigger a choice-of-law inquiry.
C.

Lex Loci Delicti Compels the Court to Apply Israeli Law
Before I can turn to an interest analysis, I must determine whether

conduct-regulating, as opposed to loss-allocating, rules are at issue. Negligence
and breach of statutory duty are unmistakably claims that implicate the appropriate
standard of conduct and are thus conduct-regulating rules. The third cause of
action, arising under section 12 of the Israeli CWO and labeled “vicarious
liability,” is a closer question. At first blush, it sounds like a classic loss-allocation
rule. However, because that Act holds liable “a person who participates in, assists,
advises or solicits an act or omission, committed or about to be committed by
another person, or who orders, or authorizes such an act or omission,”65 this Act
also regulates conduct. Plaintiffs’ contention that, notwithstanding the misleading
caption, the claim is most akin to one for aiding and abetting is accurate.66 I
64

Wultz, 755 F. Supp. 2d at 80 (quoting ISRAEL GALID, LIABILITY FOR
DAMAGE CAUSED BY OTHERS UNDER ISRAELI LAW, IN UNIFICATION OF TORT LAW:
LIABILITY FOR DAMAGE CAUSED BY OTHERS 139, 142–43 (J. Spier ed., 2003)).
65

FAC ¶ 155.

66

See Plaintiffs’ Memorandum in Opposition to Bank of China’s
Motion Concerning the Choice of Law Governing Plaintiffs’ Non-Federal Claims,
17

therefore conclude that all three of plaintiffs’ claims invoke conduct-regulating
laws.67
Because conduct-regulating rules are at stake, I will begin my analysis
with the place of the tort. The last event necessary to make BOC liable took place
at 5-7. Aiding and abetting claims appear most often in the context of breach of
fiduciary duty, so courts conducting a choice of law analysis with respect to such
claims frequently apply the internal affairs doctrine, which is inapposite here. See
In re Hydrogen, L.L.C., 431 B.R. 337, 350 (Bankr. S.D.N.Y. 2010) (collecting
cases). Courts that have not applied the internal affairs doctrine have not offered a
clear answer as to whether aiding and abetting is conduct-regulating. See Solow v.
Stone, 994 F. Supp. 173, 177 (S.D.N.Y. 1998), aff’d, 163 F.3d 151 (2d Cir. 1998)
(holding that New York had the greatest interest in applying its law without
explicitly deciding whether aiding-and-abetting was conduct-regulating); In re
Adelphia Commc’ns Corp., 365 B.R. 24, 41 (Bankr. S.D.N.Y. 2007), aff’d in part
sub nom. Adelphia Recovery Trust v. Bank of Am., N.A., 390 B.R. 64 (S.D.N.Y.
2008), adhered to on reconsideration, No. 05 Civ. 9050, 2008 WL 1959542
(S.D.N.Y. May 5, 2008) (treating aiding-and-abetting breach of fiduciary duty
“like the other tort claims,” but not explicitly determining whether it is conductregulating). Cf. Pereira v. United Jersey Bank, N.A., 201 B.R. 644, 669 (S.D.N.Y.
1996) (“[U]nder the choice of law principles of both New Jersey and New York,
New Jersey’s conduct-regulating tort law should govern the Customers’ [aiding
and abetting claim against a bank.]”) (emphasis added).
67

Alternately, if the Court were to compare the elements of commonlaw aiding and abetting with CWO § 12, it could still find the existence of at least
an arguable conflict. Compare Khulumani v. Barclay Nat. Bank Ltd., 504 F.3d
254, 287-88 (2d Cir. 2007), aff’d sub nom. American Isuzu Motors, Inc. v.
Ntsebeza, 553 U.S. 1028 (2008) (requiring that an aiding-and-abetting defendant
“substantially assist the principal violation”), with Wultz, 755 F. Supp. 2d at 80
(“Indeed, mere negligent provision of assistance to a wrongdoer has been sufficient
[to] establish such liability [under CWO § 12].”). See also King v. George
Schonberg & Co., 650 N.Y.S.2d 107, 108 (1st Dep’t 1996) (“[T]he silence of the
[defendant] did not amount to the substantial assistance that is a required element
of aider or abettor liability [under New York law].”).
18

in Israel. While the bank’s acts likely occurred in China and New York, BOC
would not be before this Court had the PIJ not committed a terrorist attack in Tel
Aviv. Thus, because this case arises out of personal injury, I place significant
emphasis on the lex loci delicti, which is Israel.
In undertaking an interest analysis, many factors point toward the
application of American, specifically New York, law. First, BOC has relied upon
the laws of China and New York in conducting its affairs; it has never sought to do
any business in Israel.68 Indeed, according to the Amended Complaint, the
allegedly tortious wire transfers likely passed through BOC’s American branches.69
Not only does the United States have a general interest in protecting the bank’s
reasonable expectations of the laws to which it would be subjected, it also has a
specific interest in applying its laws to regulate banks and other financial
institutions operating within its borders. Second, the United States has an interest
in thwarting terrorist attacks against American citizens and allies and blocking

68

See, e.g., About Us, Bank of China, http://www.boc.cn/en/aboutboc/.
See also FAC ¶ 24 (“[BOC] is a corporation organized under the laws of the
People’s Republic of China (“PRC”) and headquartered in the PRC. Defendant
BOC has branches in California and New York, does extensive business
throughout the United States and holds significant assets in the United States.”);
Def. Mem. at 15 (stating that BOC “has no branch, and does not business” in
Israel). Indeed, this fact is undisputed.
69

See FAC ¶ 69.
19

those who help finance terrorist organizations. As the country’s financial hub,
New York has a particularly strong interest in ensuring that financial institutions
operating here do not facilitate terrorist activity. Third, and similarly, the United
States has a profound interest in applying American law when Americans, like the
Wultzes, are the victims of terrorism.70 Fourth, much of the Wultz family’s harms,
including those experienced by Daniel Wultz before his death, as well as the loss
of pecuniary support, loss of income, loss of consortium, emotional distress, and
loss of society, companionship and solatium, were felt most acutely in the United
States.71
Conversely, other factors point toward the application of Israeli law.
First, because the attack took place in Tel Aviv, Israel also has an interest in
combating domestic terrorism and ensuring that terrorists operating within its
borders do not have easy access to financial resources. Second, many, if not most,
of the attack’s victims were Israeli citizens and the property damage occurred on

70

This factor, however, points just as strongly toward the application of
Florida law, where the plaintiffs are domiciled.
71

See FAC ¶¶ 137, 149. This factor also favors the application of
Florida law at least as much as it favors the application of New York law.
20

Israeli soil.72 In fact, Israel and its citizens were specifically targeted by the PIJ.73
Third, as plaintiffs have vigorously argued, the American interest in seeing
American victims of terrorism compensated may actually point toward the
application of Israeli law, given that BOC contends, and plaintiffs have admitted
several times, that under New York law, there may be no recovery.74 This
contention is somewhat blunted, however, by plaintiffs’ July 13 Letter to the Court,
in which they argue that in the recent New York Supreme Court decision, “the
Elmaliach court held that if BOC had actual knowledge it will be liable in
negligence under New York law.”75
In evaluating the competing interests, meaningful considerations favor

72

See Elmalich, No. 102026/09 (outlining action by families of Israeli

victims).
73

BOC contends that Americans were also targeted, supporting that
proposition with citations to parts of the FAC which essentially allege that China,
via BOC and the PIJ, targeted Israel to “undermine an ally of the United States.”
See Def. Mem. at 20 (quoting FAC ¶ 112). This contention is wholly conclusory
without any factual support.
74

See Transcript of 3/08/11 Hearing in Elmaliach, Ex. D. to Burger
Decl., at 21:21-22.
75

07/13/11 Letter to the Court, 2. However, plaintiffs’ assertions aside,
the question of whether plaintiffs will be able to recover under a particular set of
laws remains unsettled. In addition, whether the bank had actual knowledge is a
hotly contested issue.
21

all of the choices — New York, Florida, and Israel.76 On the one hand, the impact
on the regulation of financial institutions operating in the United States strongly
favors the selection of New York law. On the other hand, Israel’s interest in
combating terrorism and protecting its citizens and territory cuts strongly in favor
of applying that nation’s law. In the end, because the interest analysis does not
conclusively point in favor of only one choice, I defer to the weight of the
particular precedent that suggests that when conduct-regulating rules are at issue,
and when the suit arises out of personal injury, the locus of the tort controls. I
therefore choose to apply the law of Israel.
Application of foreign law here is not “violative of fundamental
notions of justice or prevailing concepts of good morals.”77 While BOC has not
intentionally done business in Israel, to the extent that BOC’s expectations matter,
banks must expect in the modern global economy that their clients will transact
business in one location that has an impact in another. The application of Israeli
law does not unfairly deprive plaintiffs of the opportunity to recover damages. Nor
does it significantly burden the defendant, which has already commissioned its
own Israeli law experts. It is true that today’s decision necessitates an additional
76

In fact, as the defendant’s corporate domicile, China too has an
interest in having its law applied.
77

Curley, 153 F.3d at 12 (citation omitted).
22

round of briefing to define the contours of applicable Israeli law. Nonetheless,
"[t]he public policy interests of the State of New York, although not insignificant,
do not rise to [the necessary] level" for the Court to eschew the application of
Israeli law. 78

v.

CONCLUSION
For the foregoing reasons, defendant's motion to apply New York law

is denied. The parties are instructed to brief the Construction of Foreign Law
Motion. Plaintiffs, as moving party, should submit their brief within twenty-eight
(28) days of this Order. BOC's response is due twenty-one (21) days later and
plaintiffs' reply will be due fourteen (14) days after that.

SO ORDERED:

Dated:

New York, New York
August 3, 2011

Greek Orthodox Patriarchate ofJerusalem v. Christie's, Inc., No. 98
Civ. 7664, 1999 WL 673347, at *5 (S.D.N.Y. Aug. 30,1999).
78

23

- Appearances For Plaintiffs:
Robert J. Tolchin, Esq.
111 Livingston Street, Suite 1928
Brooklyn, NY 11201
[phone]
For Defendant:
Mitchell R. Berger, Esq.
Patton Boggs LLP
2500 M Street, N.W.
Washington, D.C. 20037
[phone]
Walter P. Loughlin, Esq.
K&L Gates LLP
599 Lexington Avenue
New York, NY 10022
[phone]

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