Licci v. Lebanese Canadian Bank, SAL, No. 15-1580 (2d Cir. Aug. 24, 2016) [click for opinion]

Plaintiffs-Appellants ("Plaintiffs") are Israeli citizens who were injured or whose family members were killed in a series of Hezbollah rocket attacks in Israel. Plaintiffs brought this suit against Defendant-Appellee Lebanese Canadian Bank, SAL ("LCB") under the Alien Tort Statute, 28 U.S.C. § 1350 (the "ATS"), alleging that LCB facilitated the terrorist rocket attacks by using a correspondent banking account at a New York bank to effectuate wire transfers totaling several million dollars on behalf of Hezbollah. Plaintiffs specifically contended that LCB's role in conducting the wire transfers amounted to aiding and abetting genocide, war crimes, and crimes against humanity in violation of international law, which is actionable under the ATS. The issue on appeal was whether the U.S. District Court for the Southern District of New York had subject matter jurisdiction over Plaintiffs' ATS claims.

According to the Second Circuit, there are several subject-matter jurisdictional predicates, all of which must be met before a court may properly exercise jurisdiction over an ATS claim: (1) the complaint must plead a violation of the law of nations; (2) the presumption against the extraterritorial application of the ATS must not bar the claim; (3) customary international law must recognize liability for the defendant; and (4) the theory of liability alleged by plaintiffs (i.e., aiding and abetting, conspiracy) must be recognized by customary international law. The district court granted LCB's motion to dismiss the ATS claims on the basis that the presumption against extraterritorial application had not been displaced.

The Second Circuit disagreed but ultimately affirmed the district court's dismissal on other grounds. The Second Circuit addressed each of the four above predicates individually in coming to this conclusion. As to the first one, the court determined that Plaintiffs had adequately pleaded violations of the law of nations, given that genocide, crimes against humanity, and war crimes would certainly constitute violations of the law of nations under customary international law. Furthermore, as to the third predicate to jurisdiction, the court determined that aiding and abetting was a theory of liability recognized by customary international law.

The Second Circuit then turned to the presumption against extraterritoriality. When a statute, like the ATS, gives no clear indication of an extraterritorial application, it has none, reflecting the presumption that U.S. law governs domestically but does not rule the world. A plaintiff can displace this presumption if the claim sufficiently touches and concerns a U.S. territory. The Second Circuit found that Plaintiffs in this case had met this threshold requirement by alleging facts that were not merely extraterritorial; rather, Plaintiffs had alleged that LCB had used its correspondent banking account in New York to facilitate dozens of international wire transfers for an entity alleged to be an integral part of Hezbollah.

From there, a plaintiff must show: (1) whether the relevant conduct sufficiently touches and concerns the territory of the United States so as to displace the presumption against extraterritoriality, and (2) whether the same conduct upon preliminary examination states a claim for a violation of the law of nations or aiding and abetting another's violation of the law of nations. The Second Circuit found that Plaintiff's allegations were sufficiently "specific and domestic" to touch and concern the United States. The court further concluded, unlike the district court, that Plaintiffs had sufficiently alleged that conduct associated with the wire transfers would have aided and abetted a violation of the law of nations. In particular, the Second Circuit, unlike the district court, found that Plaintiffs' allegations would satisfy the mens rea requirement of its aiding and abetting claim because they had adequately alleged that LCB acted intentionally and pursuant to official policy in assisting Hezbollah and that LCB knew that the bank accounts between which it facilitated transfers were owned and controlled by entities integrally involved in Hezbollah. For these reasons, the court held that Plaintiffs' complaint had sufficiently alleged conduct to displace the presumption against extraterritoriality.

Despite meeting three of the four predicates to jurisdiction, the Second Circuit ultimately affirmed dismissal of the ATS claims, based on its previous rulings that customary international law did not recognize liability for corporations. It further noted that the only way this rule would be overturned would be by an en banc panel of the Second Circuit or by the Supreme Court. Because neither had done so up to this point, the Second Circuit was bound by the decisions of its prior panels, and it had to affirm dismissal of Plaintiffs' ATS claims on the basis that they could not properly be brought against a corporation like LCB.