Wultz v. Bank of China Ltd., No. 11-1266, 2012 U.S. Dist. LEXIS 73310 (S.D.N.Y. May 25, 2012)

The Wultz family brought an action against Bank of China Limited (“BOC”) alleging acts of international terrorism under the Antiterrorism Act as well as negligence, breach of statutory duty, and vicarious liability under Israeli law.  The Bank moved to apply New York law, rather than Israeli law, to Plaintiffs’ non-federal claims.  The district court initially denied BOC’s motion to apply New York law, but based on a recent Second Circuit decision, Licci v. Lebanese Canadian Bank, 672 F.3d 155 (2d Cir. 2012), the court reconsidered its earlier decision.  

The Palestinian Islamic Jihad (“PIJ”) carried out a suicide bombing in Tel Aviv in 2006 that killed Daniel Wultz and severely injured Yekutiel Wultz, both residents of Florida.  The Wultz family alleges that BOC facilitated dozens of wire transfers to PIJ that allowed it to plan and carry out the attack.

Initially, the district court concluded that the location of the alleged tort controls the choice of law when conduct-regulating rules are at issue and the claim arises out of personal injury, making application of Israeli law appropriate.  In Licci, however, the Second Circuit applied the interest-analysis test to a similar set of facts.  The court ruled that when a case concerns a conduct-regulating rule, the jurisdiction that has the greatest interest in regulating the behavior should be applied.  Thus, under Licci, though the injuries occurred in Israel, the majority of the bank’s conduct occurred in New York, and therefore, New York had a stronger interest in regulating the conduct.

The Wultz family argued that New York has no interest in seeing its law applied in this case and that BOC waived its argument that Chinese law should apply because it did not plead it in its answer.  BOC argued that New York law should apply because BOC’s presence and actions were in New York, it is the forum state, and New York has the greatest interest in litigation involving transactions processed in the state.

In reaching its decision, the court followed the Second Circuit’s holding that the location of the defendant’s conduct controls.  The court recognized that the majority of BOC’s conduct occurred in China.  Banks in China received the wire transfers from abroad and customers in China withdrew the money in cash.  In addition, Israeli government officials traveled to China to demand to officials there that BOC stop the transfers.  In contrast, only a small fraction of the relevant banking conduct occurred in New York, in that the wire transfers may have passed through BOC’s branch in New York and one of BOC’s three U.S. branches executed the transfers.  Because it is the location of Defendant’s conduct rather than the locus of the tort that controls, and because China’s interest in regulating bank conduct outweighs New York’s, the court held that Chinese law should apply.  The court further instructed Plaintiffs to submit a brief on whether the negligence claims will survive under Chinese tort law.