Civil Procedure - Second Circuit Upholds Extraterritorial Reach over Foreign Financial Institution under the Anti-Terrorism Act

CIVIL PROCEDURE- SECOND CIRCUIT UPHOLDS EXTRATERRITORIAL REACH OVER FOREIGN FINANCIAL INSTITUTION UNDER THE ANTI-TERRORISM ACT--Licci v Lebanese Canadian Bank, 732 F.3d 161 (2d Cir. 2013). The Anti-Terrorism Act (ATA) affords any United States national injured by an act of international terrorism a private right of action for treble damages. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) Pursuant 18 U.S.C. [section][section] 2339(A)-(C), institutions may be held liable for knowingly providing material support foreign terrorist organizations. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) in Licci v. Lebanese Canadian Bank, (NOTEREF _Ref384880710 \h \* MERGEFORMAT) the Court of Appeals for the Second Circuit considered whether a foreign bank could be subject personal jurisdiction in New York in an action brought under the ATA without violation of the due process clause. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) in doing so, the court held that the exercise of personal jurisdiction over Lebanese Canadian Bank, SAL (LCB) did not violate traditional principles of fair play and substantial justice and was consistent with due process protections provided by the U S. Constitution. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) Between the months of July and August of 2006, Hezbollah, an Islamic terrorist organization, fired thousands of rockets into northern Israel. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) in July 2008, the plaintiffs, who were injured in the rocket attacks--or whose family members were killed or injured--brought suit in the New York State Supreme Court against LCB, a bank with its headquarters in Beirut and no operations, branches, or employees in the United States and, American Express Bank Ltd. (AmEx), a Connecticut banking corporation with headquarters in New York. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) AmEx removed the suit the United States District Court for the Southern District of New York in January 2009, after which plaintiffs brought five claims against LCB for the material support of terrorism. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) Plaintiffs alleged that LCB used its correspondent bank account with AmEx wire dozens of transfers totaling millions of dollars the Shahid Foundation (Shahid), the notorious financial of Hezbollah. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) The plaintiffs further claimed that LCB violated the ATA by facilitating monetary transactions with the actual knowledge that such transfers would enable Hezbollah to plan, prepare for and carry out terrorist attacks, including the rocket attacks that injured the plaintiffs and their families in Israel. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) LCB moved dismiss, asserting a lack of personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure, and on March 31, 2010, the district court granted LCB's motion dismiss pursuant N.Y C.P.L.R. 302(a) (1). (NOTEREF _Ref384880710 \h \* MERGEFORMAT) The district court concluded that the LCB's wiring of transfers through the AmEx correspondent account constituted a mere maintenance of the account, not an active use which could amount the level of transacting business in New York. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) The district court also found that the plaintiffs' claims did not arise from the defendant's banking activity because plaintiffs' injuries were proximately caused by Hezbollah rocket attacks and not by LCB's wire transfers. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) Concluding that the case did not satisfy either prong of New York court's interpretation of the long arm statute, the district court dismissed for lack of personal jurisdiction over LCB, further adding that exercising jurisdiction over the bank would not comport with constitutional due process. (NOTEREF _Ref384880710 \h \* MERGEFORMAT) The Second Circuit certified two questions relating the application of personal jurisdiction the New York Court of Appeals for resolution, as it found the New York law be too unsettled make such a determination without the assistance of a New York court. …

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