After 9/11, waves of lawsuits were filed seeking to hold those who sponsored and supported the al Qaeda terrorist organization accountable. For instance, insurance companies, who paid out hundreds of billions of dollars in compensation for property damage and personal injuries as a result of the 9/11 attacks, filed subrogation lawsuits against al Qaeda and a host of other terrorist organizations, individual terrorists, nation states, and financial institutions allegedly involved in providing support and financial assistance to certain 9/11 hijackers and plotters. In addition, family members of those killed in the attacks, as well as those injured, also filed lawsuits. These lawsuits, among others, were consolidated into a multi-district litigation captioned In Re Terrorist Attacks on September 11, 2001.
U.S. District Court Judge George B. Daniels in the U.S. District Court for the Southern District of New York has been busy handling a bulk of the 9/11 litigation. In one such case, Havlish v. bin Laden, the Court ruled that the Islamic Republic of Iran and Hezbollah directly and materially aided al Qaeda in the 9/11 attacks. Judge Daniels ultimately entered a default judgment against Iran and Hezbollah for billions of dollars. See Dkt. Nos. 294, 295, 316, Havlish v. bin Laden (In re Terrorist Attacks on September 11, 2011), Case No. 1:03-cv-09848-GBD-SN (U.S. District Court for the Southern District of New York).
Another case pending in the Southern District of New York that has been consolidated into the multi-district 9/11 litigation, Fed. Ins. Co. et al. v. al Qaida et. al., involves claims asserted against Dubai Islamic Bank (DIB). The lawsuit alleges that DIB laundered money for Osama bin Laden and his terrorist network in the years leading up to the 9/11 attacks. Fed. Ins. Co. v. Al Qaida (In re Terrorist Attacks on September 11, 2001), No. 03 MDL 1570(GBD)(SN), Case No. 03-cv-6978. And, it is in this case that Judge Daniels recently dismissed DIB from the lawsuit after 13 years of discovery, concluding that the Court could not exercise personal jurisdiction over the bank.
At the time of the 9/11 attacks, the plaintiffs in Fed. Ins. Co. provided insurance coverage to corporations, companies, partnerships, affiliations, persons, trusts, and other parties relative to property and/or business interests impacted by the attacks. In accordance with the terms of applicable insurance policies, the plaintiffs made payments to their insureds as a result of the 9/11 attacks and the insurer-plaintiffs instituted a subrogation action to recover those payments from persons and entities allegedly responsible for the 9/11 attacks. DIB was one such defendant accused by the plaintiffs of harboring, financing, aiding, abetting, or materially supporting al Qaeda. Fed. Ins. Co. v. Al Qaida (In re Terrorist Attacks on September 11, 2001), No. 03 MDL 1570(GBD)(SN), Case No. 03-cv-6978, 2023 U.S. Dist. LEXIS 40001, at *145 (S.D.N.Y. Mar. 9, 2023). Specifically, the insurer-plaintiffs alleged that DIB laundered money for Osama bin Laden and his terrorist network in the years leading up to the 9/11 attacks. DIB has consistently denied these allegations as well as the federal court’s authority to exercise jurisdiction over DIB. Id. On March 9, 2023, after more than a decade of litigation, Judge Daniels dismissed DIB from the case due to the court’s lack of personal jurisdiction over the bank. Id. at *145-46.
DIB’S motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), brought before the Court more than a decade ago, was denied
DIB had previously moved to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2). That motion was denied by Judge Daniels in 2010 based on his review of the plaintiffs’ allegations as contained in the complaint. In re Terrorist Attacks on Sept. 11, 2011, 718 F. Supp. 2d 456, 489 (S.D.N.Y. 2010), rev’d in part on other grounds, 714 F.3d 659 (2d Cir. 2013). According to Judge Daniels in 2010, jurisdiction over DIB appeared consistent with due process because the plaintiffs’ factual allegations, if true, showed that DIB had the “requisite minimal contacts” such that subjecting DIB to suit “would not be unreasonable.” 718 F. Supp. 2d at 490. At that time, the Court based its minimum-contacts analysis on the plaintiffs’ allegations that (1) In 1999, the U.S. government announced that DIB was laundering money for Osama bin Laden; (2) U.S. officials visited the United Arab Emirates to put a halt to such a relationship; (3) DIB disregarded the warnings, refused to adhere to even minimal banking industry standards designed to thwart the support of terrorist networks, and continued to knowingly provide financial and other forms of material aid to Osama bin Laden and al Qaeda; and (4) bin Laden’s Chief Financial Officer transferred thousands of dollars from DIB to two of the 9/11 hijackers and the sole purpose of those transfers was to allegedly pay for training, flight lessons, and other expenses incurred in preparing for the 9/11 attacks. Id. at 489-90.
At that time, based on a review of the plaintiffs’ allegations only, Judge Daniels concluded that DIB “became directly involved in helping to fund the execution of the terrorist attacks of 9/11, carrying out financial services and transactions to aid the hijackers in preparing for those attacks.” Id. at 489. Judge Daniels, therefore, held that it could be reasonably inferred that “DIB personally and intentionally provided material support to al Qaeda in aid of al Qaeda’s plan to commit an aggressive terrorist strike against the United States, with knowledge that the United States and its residents would likely bear the brunt of the resulting injuries.” Id. at 481. Thus, DIB purposefully directed its activity at the United States and its residents, creating the minimum contacts necessary to exercise personal jurisdiction. Id. 489-90.
DIB renews its jurisdictional arguments after 13 years of merits discovery
After the completion of 13 years of merits discovery, DIB moved for summary judgment, renewing its argument that the Court lacked personal jurisdiction over it. Fed. Ins. Co. v. Al Qaida (In re Terrorist Attacks on September 11, 2001), No. 03 MDL 1570(GBD)(SN), 2023 U.S. Dist. LEXIS 40001, at *145 (S.D.N.Y. Mar. 9, 2023). DIB argued that the evidence compiled in discovery required the Court to reach a different conclusion that it had reached upon a review of the plaintiffs’ allegations—asserting that there was no evidence that DIB purposefully directed its conduct at the U.S. or that its US-linked conduct related to the plaintiffs’ specific 9/11 claims. Id. at *145-46. The plaintiffs countered that DIB’s links to al Qaeda established that it targeted the U.S., and, consistent with due process, the plaintiffs could seek redress for the tremendous damages they suffered on 9/11. Id.
The Court’s initial analysis of declassified CIA files
Interestingly, about a year prior to the Court’s decision on DIB’s motion for summary judgment, the CIA declassified intelligence previously withheld from the parties during discovery, which included reports written before and after the 9/11 attacks referencing both DIB and its former Chairman Saeed Ahmed Lootah. Id. at *148. Perhaps most significant was the CIA’s view in the late 1990s that DIB was a “key financial conduit” for al Qaeda and that al Lootah had a close friendship with bin Laden himself. Id. at *157.
In its decision on DIB’s motion for summary judgment, the Court first addressed the declassified CIA files, which DIB argued constituted inadmissible hearsay. Id. at *159-61. Judge Daniels rejected DIB’s argument and deemed the CIA reports to be factual findings from a legally authorized investigation and therefore trustworthy. Accordingly, the Court admitted the CIA files under the governmental records hearsay exception for the limited purposes of the motion before it. Id. at *159-162.
No general jurisdiction over DIB
On the personal jurisdiction question, Judge Daniels first determined that general jurisdiction did not exist over DIB because DIB is incorporated and headquartered in the UAE, and therefore, DIB was not “at home” in the United States sufficient to confer general jurisdiction over it. Id. at *167-68.
On the question of specific jurisdiction, the court recognized that after more than a decade of merits discovery, the evidence against DIB was much different from the allegations in the complaint
In considering whether specific jurisdiction existed over DIB, the Court analyzed the two necessary steps in a specific personal jurisdiction analysis: (1) whether the assertion of personal jurisdiction would comport with fair play and substantial justice, i.e., whether the assertion of personal jurisdiction would be reasonable under the circumstances; and (2) whether the suit arises from the defendant’s certain “minimum contacts with the forum.” Id.
The Court concluded that the assertion of personal jurisdiction over DIB would be reasonable and comported with principles of fair play and substantial justice
In weighing the first step, the “reasonableness” of the assertion of personal jurisdiction, Judge Daniels reviewed the factors set forth by the U.S. Supreme Court in Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 113 (1987), and concluded that the exercise of jurisdiction over DIB would be reasonable. 2023 U.S. Dist. LEXIS 40001 at *169-70. The Court determined that the (i) burden on DIB to defend the case in the U.S. was not unreasonable since it had participated for years in litigation and was ably represented by U.S.-based counsel; (ii) the U.S. has a strong interest in providing its residents with a convenient forum for redressing injuries inflicted by international actors; (iii) the plaintiffs also had a strong interest in obtaining relief because their witnesses and evidence were primarily within the U.S. and the U.S. court system was likely the only venue that could hear their claims; and (iv) “both efficiency and anti-terrorism policies favor hearing the plaintiff’s claims in the U.S., which is the locus of all harm incurred in the 9/11 attacks.” Id. at *169-70.
DIB won its motion based upon its lack of requisite minimum contacts with the forum – even “alternative” theories of minimum contacts were not enough
It was the second step of the specific personal jurisdiction analysis that the paintiffs could not surmount—there, Judge Daniels concluded that DIB did not have the “requisite minimum contacts” with the forum which would confer jurisdiction over DIB even despite the plaintiffs’ urging that the reasonableness of the exercise of jurisdiction overcame any deficiencies in DIB’s minimum contacts.
Lacking evidence of any in-forum contacts by DIB, the plaintiffs in Fed. Ins. Co. offered two alternative theories of requisite “minimum contacts” sufficient to exercise jurisdiction – (1) a “purposeful direction” (or “effects” test”)—a theory of personal jurisdiction where the conduct that forms the basis for the controversy occurs entirely out of the forum, and the only relevant jurisdictional contacts with the forum are in-forum effects that are harmful to the plaintiff and expressly aimed at the forum; and (2) a conspiracy theory (or concerted action theory) attributing al Qaeda’s in-forum contacts to DIB. Id. at *171. Judge Daniels found that the plaintiffs failed to establish a basis to exercise personal jurisdiction under either of these theories.
Purposeful Direction/Effects Test
Under the purposeful direction/effects test, Judge Daniels concluded that the test required a showing of both intent to aid al Qaeda in the commission of a terrorist attack against the United States and a nexus between DIB and al Qaeda. As to intent, the Court noted that the law under the aiding-and-abetting standard under the Anti-Terrorism Act, the federal statute under which the claims against DIB largely arise, required that DIB be “generally aware” that it was “playing a ‘role’ in [al Qaeda’s] violent or life-endangering activities.” Id. at *172-73. This analysis compelled an evaluation of the factual record by the Court. As to nexus, DIB’s support of al Qaeda “must have a reasonable … temporal, geographical or causal connection, or proximity to the 9/11 attacks[,]” which requires an analysis of “what support was given” and “when,” “how the defendants were involved in … providing support to” al Qaeda, and whether funding was “‘earmarked’ for use in specific schemes or attacks not directed at the United States.” Id. at *173. An analysis of the factual record was also required to answer these questions.
Reviewing the evidence compiled over 13 years and presented before the Court, Judge Daniels concluded that although (i) “DIB held accounts for individuals and entities involved in al Qaeda plots and provided ‘routine banking services’ for them[;]” (ii) “DIB’s onetime Chairman Lootah and two members of the Shariah Board harbored extremist views or maintained links to extremist groups[;]” and (iii) certain individuals and entities affiliated with al Qaeda did hold accounts at DIB, there “is no specific evidence that any of the accounts held by individuals or entities with links to al Qaeda provided funding for the terrorist organization’s operations, let alone for the 9/11 Attacks.” Id. at *176.
The Court concluded that the evidentiary facts materially differed from the plaintiffs’ allegations – holding that the purposeful direction/effects test was not met because DIB’s role was more akin to a “passive conduit” through which funds were “indirectly channeled to and from al Qaeda[,]” and “DIB lacked the general awareness required to be found to have been an aider-abettor of al Qaeda.” Id. at *179.
Concerted Action / Conspiracy Theory
Shifting to the plaintiffs’ alternative “concerted action” theory of personal jurisdiction, the Court noted that this broad theory can refer to a “conspiracy, or concerted action by agreement” and “aiding-abetting, or concerted action by substantial assistance.” Id. at *180.
To invoke a conspiracy theory, the Court noted that a plaintiff must show, among other elements, that a conspiracy – “an agreement between two or more persons… to participate in an unlawful act” – existed. Id. at 180. Reviewing the factual record discussed above, the Court concluded that “[a]t most, these facts suggest that DIB and [its onetime chairman] Lootah knowingly facilitated financial transactions for individuals linked to al Qaeda, an organization openly hostile to the United States[,]” but that these facts did not establish the existence of a conspiracy. Id. at *181-82.
Moving on to the “concerted action by substantial assistance” version of the theory, the Court refused to apply the concerted action theory to alleged aiders-abettors such as DIB, instead reserving the concerted action theory only for conspirators because “the law deems co-conspirators to be each other’s agents.” Id. at *183. The Court reasoned that the law does not deem aiders-abettors to be principals of those they assist, so attributing a principal’s contacts to an aider-abettor would be constitutionally suspect. Id. at *183-84. Ultimately, the Court held that it would “violate due process” to extend personal jurisdiction under this concerted action theory over “foreign aiders-and-abettors that lacked any contacts with the United States.” Id. at *185.
As a result of Judge Daniels’ decision, DIB was dismissed from the litigation. Interestingly, while the Ford Motor Co. v. Mont. Eight Jud. Dist. Ct., 141 S. Ct. 1017 (2021) decision was cited to in passing in Judge Daniel’s decision, Ford Motor Co. was not given any weight as it concerned the question of DIB’s minimum contacts within the forum. Presumably, that is primarily due to there being insufficient evidence that DIB purposefully availed itself of the privilege of conducting activities within the U.S. – the record showed that DIB did not conduct business or provide services in the U.S., nor had it sought qualifications to do so.
Judge Daniels’ decision serves as an important reminder that even in cases involving emotionally fraught allegations and tremendous damages to U.S. citizens, district courts carefully scrutinize the exercise of personal jurisdiction over foreign defendants. Foreign litigants must be guided wisely and carefully when faced with a lawsuit in the United States and should consider, at the outset of the litigation and prior to filing an answer, whether to challenge the exercise of personal jurisdiction.