How will 2nd Circuit’s rejection of verdict against PLO affect anti-terror suits?

September 1, 2016

The 2nd U.S. Circuit Court of Appeals more or less said Wednesday that the federal law granting terrorism victims the right to bring private litigation against alleged attack sponsors cannot be applied against the Palestinian Authority and the Palestine Liberation Organization.

The appeals court threw out a $655.5 million judgment against the PLO and the PA, holding that federal district judge George Daniels of Manhattan was wrong about his jurisdiction over claims by U.S. victims of a half-dozen attacks in Israel. Judge Daniels had ruled he had general personal jurisdiction to hear the case because the defendants maintained “continuous and systematic business and commercial contacts within the United States.”

The three-judge panel – 2nd Circuit Judges Pierre Leval and Christopher Droney and U.S. District Judge John Koeltl of Manhattan, sitting by designation – said, however, that the U.S. Supreme Court’s analysis of personal jurisdiction in the 2014 decision Daimler v. Bauman precludes general jurisdiction against the PLO and the PA. Under the Daimler test, the 2nd Circuit said, the defendants are not “at home” in federal court just because they have offices in Washington, D.C. and New York and promote the Palestinian cause in the U.S. Instead, the appellate court held, “the overwhelming evidence shows that the defendants are ‘at home’ in Palestine, where they govern.”

Nor did Judge Daniels have specific personal jurisdiction to hear the case, Judge Koeltl wrote in the appellate court’s opinion. The 2nd Circuit acknowledged that Congress wrote the Anti-Terrorism Act to give U.S. citizens a forum in this country to sue those allegedly responsible for attacks. But the appeals court said ATA plaintiffs have to show that attacks have a substantial connection to the United States – that, for instance, bombers specifically targeted U.S. citizens or that bombings were executed in order to impact U.S. policy.

Here, the court said, the plaintiffs hadn’t established that link. Israel, and not the U.S., was the primary target of the attacks, according to the 2nd Circuit. “There was no such purposeful connection to the forum in this case, and it would be impermissible to speculate based on scant evidence what the terrorists intended to do,” Judge Koeltl wrote. “While the killings and related acts of terrorism are the kind of activities that the ATA proscribes, those acts were unconnected to the forum and were not expressly aimed at the United States.”

There’s an interesting legal question underlying the 2nd Circuit’s Daimler interpretation. The plaintiffs’ lawyers at Arnold & Porter had argued (along with former federal officials acting as amici) that the Supreme Court’s Daimler opinion addressed only the Fourteenth Amendment’s Due Process clause, which was written in the context of states’ rights and says no state shall deprive anyone of due process. The Fifth Amendment’s Due Process Clause says simply that everyone is entitled to due process. Arnold & Porter and the federal officials said the Fifth Amendment governs the exercise of federal power, including the reach of U.S. laws abroad. Importing the Supreme Court’s Daimler interpretation of jurisdiction under the Fourteenth Amendment to apply to the Fifth Amendment’s Due Process clause would improperly interfere with the authority of U.S. courts to oversee extraterritorial issues Congress has deemed to be in the national interest – such as discouraging terrorism.

The 2nd Circuit said it has already grappled with this question in other ATA cases and has unswervingly concluded that due process analysis for personal jurisdiction is the same under both the Fifth and Fourteenth Amendments. To hold otherwise in this case, Judge Koeltl wrote, would be to “upend settled law.”

But plaintiffs are advancing similar arguments at the District of Columbia U.S. Circuit Court of Appeals, where three other ATA cases against the PLO and the Palestinian Authority are on appeal. In all of those cases, trial judges cited Daimler to dismiss attack victims’ claims for lack of jurisdiction. If the D.C. Circuit ends up concluding the Fifth and Fourteenth Amendments require the same due process analysis, that’s probably the end of the legal issue. If, on the other hand, the circuits split, the Supreme Court may have to resolve the question, which it has consciously avoided in previous cases.

In the meantime, what happens to pending ATA cases as a result of the 2nd Circuit decision? Probably not much, according to George Washington University law professor Peter Raven-Hansen, who signed the former federal officials’ amicus brief in the PLO appeal. The 2nd Circuit specifically pointed out that in litigation against banks that allegedly facilitated attacks outside of the U.S., there’s usually specific jurisdiction because the banks wired money through the U.S., establishing a purposeful connection to the forum of federal court. (I wrote earlier this year about international banks trying – and failing – to get ATA claims dismissed under Daimler.)

Corporations sued under the ATA, Raven-Hansen said, might benefit from the 2nd Circuit decision if they can argue their ties to the U.S. were unrelated to their alleged wrongdoing under the ATA. Otherwise, he said, the PLO ruling will have “limited impact.”

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