DOJ dismissal motion leaves mystery in shipping magnate’s libel case

September 15, 2014

We know the U.S. government believes that it has such significant national security interests at stake in a libel suit by the Greek shipping magnate Victor Restis against the non-profit United Against Nuclear Iran that on Friday, the Justice Department invoked the state secrets privilege and asked for Restis’ suit to be dismissed. What we don’t know is why.

The government’s brief is maddeningly opaque about its interest in a private libel case. It states just that the head of an unnamed federal agency has determined that information related to Restis’ claim is subject to the powerful and rarely invoked state secrets privilege. Even revealing the identity of the agency or the basis of the assertion of the privilege, according to Justice, might compromise “classified and privileged matters,” the brief said. All of the specifics on Justice’s claim of privilege are contained in declarations that only U.S. District Judge Edgardo Ramos of Manhattan – and not even lawyers for Restis and UANI – can see. The judge will have to decide whether to permit Justice to intervene, though that’s really a formality because of the executive branch’s broad discretion to claim the state secrets privilege.

It’s extremely unusual, though not unprecedented, for the government to invoke the state secrets privilege and move to intervene in private litigation. In a 2010 decision called Mohamed v. Jeppesen Dataplan, for instance, Justice secured the dismissal of an Alien Torts Act suit against a company that allegedly helped the Central Intelligence Agency transport suspected terrorists for interrogation outside of the United States, after the 9th U.S. Circuit Court of Appeals, sitting en banc, concluded that the case implicated the state secrets privilege.

But the U.S. government’s interest in shrouding the CIA’s extraordinary rendition program seems obvious. The national security implications of Restis’ case against UANI are, as the New York Times reported Sunday, much murkier. Restis’ lawyer, Abbe Lowell of Chadbourne & Parke, told the Times that “there is no precedent, literally, for what the government is attempting to do.” (Lowell didn’t return my call.) Ben Wizner of the American Civil Liberties Union, who represented plaintiffs in the 9th Circuit case that was dismissed under the state secrets doctrine, told Times reporter Matt Apuzzo, “I have never seen anything like this.”

The government’s motion to dismiss Restis’ case clearly benefits UANI, a group headed by Mark Wallace, who served as a United Nations ambassador in the George W. Bush administration. (UANI’s other founders include former CIA director James Woolsey and the late Richard Holbrooke, a diplomat and former assistant secretary of state.) UANI has issued public denunciations of Restis, accusing him of violating international sanctions and aiding Iran’s development of nuclear arms by secretly exporting Iranian oil in his company’s ships. Restis said UANI’s “name and shame” announcements were hurting his business and sued for libel.

The Justice Department has been watching the case since February, when a Manhattan assistant U.S. attorney entered an appearance at a hearing before Judge Ramos, apparently at the behest of UANI. The government’s dismissal brief is coy on that point, noting just that Justice “was first alerted to the case” last winter. Restis counsel Lowell, however, said in a letter to Judge Ramos in May that he didn’t tell the government about the suit. Lowell’s letter complained, in fact, that UANI’s lawyers appeared to be talking regularly to lawyers from the office of Manhattan U.S. Attorney Preet Bharara, while he’d had no communications with Justice about the case. The government, he said, hadn’t even bothered to reply when he asked about a third party’s assertion that UANI head Wallace “has been bragging that he is going to get (Justice) to have the case against him ‘dismissed.'”

So Justice’s invocation of the state secrets privilege and motion to toss the case can be inferred as an endorsement of UANI’s campaign against Restis, or, at least, as a sign that the Obama administration doesn’t want to silence UANI.

On the other hand, Justice’s secrecy means Restis supporters can indulge their conspiracy theories about UANI’s funding and allegiances. In one discovery motion, Lowell and his team posited that the group, through members of its advisory board, has strong ties to Israeli and European intelligence operations. Another motion suggested that Mark Wallace, who is the CEO of a company that owns silver mines, has a financial motive to use UANI to foment unrest in the Middle East. (The founder of that company, according to Restis, is also related by marriage to an Israeli shipping tycoon who competes directly with Restis’ business.)

Restis’ theories seem far-fetched (and UANI, as you would expect, has said they are, in briefs opposing the discovery demands), but it also appears that Justice wanted to find a way to make this case to go away. When the government first registered an appearance, it said it was interested in what Restis had to say about grain shipments to Iran. As recently as April, Justice said it was considering invoking the law enforcement privilege – not the more potent state secrets privilege – to shield some information in the case. Now it wants not simply to protect certain documents but to have the entire case tossed, without any public explanation. (The government brief invited Judge Ramos to dismiss the case for reasons put forth in UANI’s dismissal brief, but also said that the case can’t be litigated without risking the exposure of state secrets, so it must be tossed.)

Restis has been ordered to appear in New York for a deposition by the magistrate overseeing discovery in his suit. His lawyers are fighting that order before Judge Ramos even as they press for discovery from third parties tangentially connected to UANI. That he’ll avoid deposition will be a silver lining for Restis if Ramos listens to the government and dismisses his suit. But for all of us left wondering about the government’s motives, all we can see is a fat gray cloud.

UANI counsel Wolosky sent me an email comment: “Mr. Restis’ bizarre conspiracy theories are desperate attempts to distract from his many civil and criminal problems….They are also attempts to distract from this core truth, which he no longer can deny: Mr. Restis’ vessels regularly call on Iranian ports. UANI will not be silenced like others Mr. Restis has threatened and intimidated.”
(This post has been updated to add comment from UANI’s lawyer.)

For more of my posts, please go to WestlawNext Practitioner Insights

Follow me on Twitter

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see