Havlish v. 650 Fifth Ave. Co. , 934 F.3d 174 ( 2019 )

17‐3278(L)
Havlish v. 650 Fifth Ave. Co.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
______________
August Term 2018
(Argued: May 1, 2019 | Decided: August 9, 2019)
Docket Nos. 17‐3278(L), 17‐3243(Con), 17‐3251(Con),
17‐3254(Con), 17‐3255(Con), 17‐3260(Con), 17‐3261(Con), 17‐3262(Con),
17‐3264(Con), 17‐3265(Con), 17‐3267(Con), 17‐3268(Con), 17‐3269(Con),
17‐3271(Con), 17‐3272(Con), 17‐3276(Con)
FIONA HAVLISH, ET AL.,
Plaintiffs‐Appellees,
v.
650 FIFTH AVENUE COMPANY, ALAVI FOUNDATION,
Defendants‐Appellants,
ASSA CORPORATION, ASSA CO. LTD.,
Defendants.*
______________
Before:
PARKER, WESLEY, and CHIN, Circuit Judges.
* The Clerk of the Court is directed to amend the official caption as set forth above.
These consolidated appeals ask whether two entities (the “Defendants”)
must turn over substantial real and financial property interests to hundreds of
terrorism victims holding default judgments against the Islamic Republic of Iran.
The victims allege that the Defendants should be treated as the “foreign state” of
Iran under § 1610(b)(3) of the Foreign Sovereign Immunities Act (“FSIA”) and as
a “terrorist party” under § 201 of the Terrorism Risk Insurance Act (“TRIA”).
Following a bench trial, the United States District Court for the Southern District
of New York (Forrest, J.) ordered the turnover of the Defendants’ property under
both statutes.
We hold that the district court violated the mandate we issued in a
previous decision instructing it not to send the FSIA claims to trial. We also hold
that the court violated the law of the case by finding that 650 Fifth Avenue
Company is a foreign state under the FSIA. We REVERSE the judgment on these
claims and REMAND for the court to enter judgment for the Defendants.
Without reaching the merits of the TRIA claims, we hold that the district
court abused its discretion by precluding two of the Defendants’ witnesses from
testifying at trial. We therefore REVERSE the underlying order and VACATE
the judgment on the TRIA claims. We also REMAND for a new trial on these
claims.
The Defendants additionally challenge the district court’s decision to deny
them a jury trial on the TRIA claims upon finding that the Defendants waived
their alleged jury right. Without reaching the court’s waiver finding, we hold
that TRIA § 201 litigants lack the right to a jury trial in actions against a state
sponsor of terrorism, including its agencies or instrumentalities. We AFFIRM the
court’s decision denying a jury trial on this ground.
We therefore AFFIRM in part, REVERSE in part, VACATE in part, and
REMAND for a new trial on the TRIA § 201 claims.
_________________
JAMES L. BERNARD, Stroock & Stroock & Lavan LLP, New York,
NY (Curtis C. Mechling, Patrick N. Petrocelli, Pamela S.
Takefman, Stroock & Stroock & Lavan LLP, New York, NY;
Liviu Vogel, Salon Marrow Dyckman Newman & Broudy
LLC, New York, NY; Timothy B. Fleming, Wiggins Childs
Pantazis Fisher Goldfarb PLLC, Washington, DC; Ralph P.
2
Dupont, Barbara J. Dupont, Dupont Law Firm LLP, Stamford,
CT; Dale K. Cathell, Richard M. Kremen, DLA Piper LLP (US),
Baltimore, MD; Peter R. Kolker, Zuckerman Spaeder LLP,
Washington, DC; Anant Kumar, Zuckerman Spaeder LLP,
New York, NY, on the brief), for Plaintiffs‐Appellees.
DANIEL S. RUZUMNA, Patterson Belknap Webb & Tyler LLP, New
York, NY (Diana M. Conner, Leigh E. Barnwell, Patterson
Belknap Webb & Tyler LLP, New York, NY; John Gleeson,
Matthew E. Fishbein, Debevoise & Plimpton LLP, New York,
NY, on the brief), for Defendants‐Appellants.
_________________
WESLEY, Circuit Judge:
Over the past few decades, hundreds of terrorism victims have obtained
default judgments against the Islamic Republic of Iran in federal court. Iran has
yet to satisfy these judgments, and the victims have returned to the courts
seeking to execute their judgments through the attachment of Iranian assets
located within the United States. Among these individuals are the hundreds of
Plaintiffs‐Appellees in these consolidated appeals (the “Judgment Creditors”). In
the actions below, the Judgment Creditors sued the Alavi Foundation and 650
Fifth Avenue Company (the “Defendants”), alleging that the Defendants are
sufficiently close to Iran that their assets are subject to attachment and execution
under the Foreign Sovereign Immunities Act (“FSIA”) and the Terrorism Risk
3
Insurance Act (“TRIA”). After nearly a decade of litigation, including a 2016
appeal to this Court1 and a month‐long bench trial, the United States District
Court for the Southern District of New York (Forrest, J.) found for the Judgment
Creditors on their claims under both statutes. The court ordered the Defendants
to turn over substantial property interests, including their stakes in 650 Fifth
Avenue (the “Building”), a 36‐story commercial skyscraper in Midtown
Manhattan. Kirschenbaum v. 650 Fifth Ave. & Related Props., 257 F. Supp. 3d 463(S.D.N.Y. 2017).
The Defendants argue that the district court committed several errors
requiring us to reverse or vacate the judgment. We agree.
First, the district court violated both the mandate from our 2016 decision
and the law of the case by sending the FSIA claims to trial. We reverse the
judgment on the FSIA claims and remand for the court to enter judgment on
these claims for the Defendants.
Second, the district court abused its discretion by precluding two former
Alavi board members from testifying at trial. We reverse the underlying order.
1 See Kirschenbaum v. 650 Fifth Ave. & Related Props., 830 F.3d 106 (2d Cir. 2016), abrogated
in part by Rubin v. Islamic Republic of Iran, 138 S. Ct. 816 (2018).
4
This holding requires us to vacate the judgment and remand for a new trial on
the Judgment Creditors’ TRIA § 201 claims.
The Defendants also argue that the district court erroneously held that
they waived their alleged right to a jury trial on the TRIA claims. We need not
reach this question because no right to a jury trial attaches in TRIA § 201 actions
pled against a state sponsor of terrorism, including its agencies or
instrumentalities.
We therefore affirm in part, reverse in part, vacate in part, and remand for
a new bench trial on the TRIA § 201 claims.
BACKGROUND2
The Parties
The Judgment Creditors are direct and indirect victims of terrorist attacks
linked to the Islamic Republic of Iran. Kirschenbaum, 830 F.3d at 117. While we do
not mean to look past the stories giving rise to each of their claims, the relevant
2 In 2016, we vacated the district court’s order granting summary judgment to the
Judgment Creditors in this action. See Kirschenbaum, 830 F.3d 107. A more complete
version of the facts giving rise to this litigation is found in that opinion.
5
fact for the purpose of these appeals is that these individuals all have unsatisfied
judgments for money damages against Iran.3
Alavi is a New York not‐for‐profit corporation created in 1973 by
Mohammad Reza Pahlavi, then Shah of Iran.4 Among other properties and
interests spread throughout the United States, Alavi owns 60% of 650 Fifth Ave.
Co., a real estate partnership that owns the Building. Alavi’s partner, the Assa
Corporation, owns the remaining 40%. As we previously found, and reaffirm in a
companion opinion, both Assa Corporation and its parent Assa Co. Limited
(collectively, “Assa”) are ultimately owned and controlled by the Government of
Iran. See id. at 118.
3Unless otherwise noted, the resolution of the Judgment Creditors’ claims turns on the
same analysis. One exception is that some Judgment Creditors pursued relief under
either the FSIA or TRIA, but not both statutes. Thus, while this opinion speaks of the
Judgment Creditors collectively, it does so with the caveat that, at times, the term
“Judgment Creditors” refers only to those Judgment Creditors who pursued the claim
under discussion.
4Alavi was originally known as the Pahlavi Foundation and later as the Mostazafan
Foundation of New York. We refer to all iterations of the entity as Alavi.
6
Pleadings, Early Developments, and Summary Judgment
1. The Complaints
The Judgment Creditors began filing the turnover lawsuits giving rise to
these appeals in December 2008, shortly after the Government initiated a civil‐
forfeiture action against Assa’s real and financial property interests. Their
complaints allege that the Defendants, through their connections to Iran, are a
“foreign state” under the FSIA and a “terrorist party” under TRIA. Under both
statutes, the Judgment Creditors seek to enforce their judgments against Iran
through the attachment and execution of the Defendants’ domestic properties
and interests.
2. Early Developments
In 2010, the United States District Court for the Southern District of New
York (Holwell, J.) consolidated these actions for pretrial purposes. In 2012, the
Southern District reassigned the cases to Judge Forrest.
The Judgment Creditors eventually moved for summary judgment and
turnover of the Defendants’ properties on their FSIA and TRIA claims, with the
exception of their FSIA § 1610(b) claims, which they reserved. The district court
granted the motion.
7
Much of the summary judgment opinion focused on whether the district
court had subject matter jurisdiction under the FSIA and TRIA. The court
concluded on three alternative grounds that it did. First, it held that the
Defendants could be treated as Iran itself, which suffices for jurisdiction under
both statutes. In re 650 Fifth Ave. & Related Props., No. 08 Civ. 10934 (KBF), 2014
WL 1516328, at *10–11 (S.D.N.Y. Apr. 18, 2014) (citing 28 U.S.C. § 1603(a)).
Second, it held that the Defendants are an “agency or instrumentality” of Iran. Id.
at *13 (citing 28 U.S.C. § 1603(a)). While holding that FSIA § 1603(a)’s definition
of “agency or instrumentality” did not formally apply to the Defendants because
they are citizens of New York, see 28 U.S.C. § 1603(b)(3), the court concluded that
it could disregard this problem and treat the Defendants as Iran under an alter‐
ego theory drawn from First National City Bank v. Banco Para El Comercio Exterior
de Cuba (Bancec), 462 U.S. 611 (1983), superseded in part by statute as stated in Rubin,
138 S. Ct. 816. In re 650 Fifth Ave., No. 08 Civ. 10934 (KBF), 2014 WL 1516328, at
*13–14. Third, and outside of the “agency or instrumentality” context, the court
held that Bancec’s equitable principles directly authorized jurisdiction because
the Defendants are Iran’s alter ego and could therefore be treated as Iran. Id. at
*12.
8
Even where a court has jurisdiction over a turnover action involving a
foreign state, the FSIA makes “the property in the United States of a foreign state
. . . immune from attachment arrest and execution [subject to certain
exceptions].” 28 U.S.C. § 1609. The court found that three attachment‐immunity
exceptions applied here: two in the FSIA, 28 U.S.C. §§ 1610(a)(7) and 1610(g), and
one in § 201 of TRIA, codified at 28 U.S.C. § 1610 note. In re 650 Fifth Ave., No. 08
Civ. 10934 (KBF), 2014 WL 1516328, at *14–21.
3. The First Appeal
In 2016, we vacated the judgment. See Kirschenbaum, 830 F.3d at 117. We
found error in each of the district court’s three alternative bases for jurisdiction.
On the first ground, we rejected the court’s definition of “foreign state,” noting
that the court had improperly drawn it from an executive order and federal
regulations. Id. at 123–25. Applying the definition outlined in our precedent, we
concluded that the Defendants are not foreign states “as a matter of law” under
the FSIA. Id. at 141. On the third ground, we rejected “as a matter of law” the
court’s theory that the Defendants are Iran’s alter egos under Bancec, finding a
“lack of evidence demonstrating Iran’s day‐to‐day control of Alavi.” Id. at 130.
9
Much of our analysis turned on the second ground: the court’s “agency or
instrumentality” finding under the FSIA. See id. at 127–28. Looking to FSIA
§ 1603(b)’s definition of that term, we focused on subsection (b)(3)’s requirement
that an agency or instrumentality must be “neither a citizen of a State of the
United States as defined in [28 U.S.C. §§ 1332(c) and (e)], nor created under the
laws of any third country.” Id. at 126. The district court had found that the
Defendants were Iran, and were therefore Iranian citizens, under Bancec’s alter‐
ego theory. Id. In the court’s view, this was the only reason the Defendants
satisfied § 1603(b)(3).
We first explained that, because Alavi is incorporated in New York, it “is
unequivocally a ‘citizen of a State of the United States’ that falls outside the
ambit of agency or instrumentality status under § 1603(b)(3). See 28 U.S.C.
§ 1332(c).” Id. at 127 n.10.
We reached the same conclusion with respect to 650 Fifth Ave. Co., albeit
on a different ground. We noted that 650 Fifth Ave. Co. appeared to satisfy
subsection (b)(3) because as a partnership—as opposed to a corporation like
Alavi—it is not a “citizen of a State” under § 1332(c). Id. However, the Judgment
Creditors had not challenged the district court’s holding that, absent Bancec’s
10
alter‐ego theory, 650 Fifth Ave. Co. is a “citizen of a State.” We therefore
“assume[d] without deciding that § 1603(b)(3) exempts . . . 650 Fifth Ave. Co.
from agency or instrumentality status under the FSIA.” Id. After holding that the
Bancec theory was incorrect, we concluded that the “Defendants do not qualify,
as a matter of law, as the agencies or instrumentalities of the foreign state of Iran
. . . [under] 28 U.S.C. § 1603(b).” Id. at 141.5 This decision left TRIA § 201 as the
only basis for recovery available to the Judgment Creditors.
We reached a different conclusion on the TRIA claims. For TRIA § 201 to
apply, the defendant must be a “terrorist party” or an “agency or
instrumentality” thereof. See TRIA § 201(a). Although Iran is a terrorist party
under the statute, we held that the Defendants could not be treated as Iran itself
under TRIA for the same reasons that we rejected such treatment under the FSIA.
Kirschenbaum, 830 F.3d at 131–32. Turning then to the “agency or
instrumentality” issue, we found that this phrase has a different definition in
5 In 2018, the Supreme Court abrogated our decision to the limited extent that it treated
FSIA § 1610(g) as a freestanding exception to attachment immunity. See Rubin, 138 S. Ct.
at 816, 827. Instead, the Court held, § 1610(g) “operates only when the property at issue
is exempt from immunity as provided elsewhere in § 1610.” Id. at 820. This holding has
no bearing on the issues currently before us.
11
TRIA than it does in the FSIA. Id. at 132–35.6 We remanded for further
proceedings because the issue of whether the Defendants fit TRIA’s “agency or
instrumentality” definition turned on material questions of fact. Id. at 135–37. We
identified two specific material questions that the district court needed to
resolve: “(1) [whether the] Defendants are, indeed, agencies or instrumentalities
for TRIA purposes, and (2) [whether] their properties are ‘blocked assets’ [under
§ 201 of TRIA].” Id. at 131. Our remand instruction stated that these two TRIA
issues were “the only issues returning to the [district court] for further
proceedings.” Id. at 142 (emphasis added).
Proceedings on Remand
On remand, the Judgment Creditors sought permission to pursue FSIA
§ 1610(b)(3) claims against 650 Fifth Ave. Co. at trial. The district court granted
this request. It acknowledged our holding that the Judgment Creditors waived
their ability to argue that 650 Fifth Ave. Co. is not a “citizen of a state” under
6 “To demonstrate that [the] Defendants are ‘agencies or instrumentalities’ of a terrorist
party under the TRIA . . . [the Judgment Creditors] must show that each Defendant (1)
was a means through which a material function of the terrorist party is accomplished,
(2) provided material services to, on behalf of, or in support of the terrorist party, or (3)
was owned, controlled, or directed by the terrorist party.” Id. at 135.
12
§ 1603(b)(3). However, the court found that neither its summary judgment
opinion nor our decision addressed the Judgment Creditors’ FSIA § 1610(b)(3)
claims. In the district court’s view, the Judgment Creditors had “expressly
reserved” these claims in their summary judgment motion. Kirschenbaum v. 650
Fifth Ave. & Related Props., No. 09 Civ. 165 (KBF), 2017 WL 8638863, at *1
(S.D.N.Y. May 4, 2017). Reasoning that “the waiver that foreclosed the argument
as to citizenship status was limited to the issues that had been litigated and
decided”—meaning the §§ 1610(a)(7) and 1610(g) claims, but not the § 1610(b)(3)
claims—the court found it “patently clear that there was no legal ruling by the
Second Circuit with regard to the availability of Section 1603(b)(3) for a Section
1610(b)(3) claim. That claim was not before it.” Id. at *2.
Turning to our mandate, the district court quoted our language stating that
“the only issues returning” on remand were two questions about whether TRIA
applied here. Id. at *3 (quoting Kirschenbaum, 830 F.3d at 142). However, the court
reasoned that our mandate “is properly interpreted in the context of what was
before the Second Circuit on appeal. It should not be read as the Second Circuit
reaching out beyond those issues to foreclose as yet unlitigated issues that were
not before it. Properly read against the appellate issues raised and decided, the
13
Second Circuit’s mandate does not preclude plaintiffs from pursuing their FSIA
Section 1610(b)(3) claim now.” Id.
The district court scheduled a bench trial for May 30, 2017. The court
planned for this trial to operate in tandem with the jury trial in a coordinated
action involving the Government’s civil‐forfeiture claims against the Defendants’
property. Testimony from the jury trial would also be testimony for the bench
trial, and many of the court’s orders applied to both trials. Among these
overlapping orders was one precluding the testimony of two former Alavi board
members.
In March 2017, the Defendants took the position that they were entitled to
a jury trial on the TRIA claims. The district court disagreed, finding that the
Defendants had waived their alleged right to a jury trial. The court noted that
early in these proceedings, at least one party in each of the Judgment Creditor
turnover actions had demanded a jury trial. But in 2013, the Judgment Creditors
collectively withdrew their jury demands, explaining in a letter to the court that
“[t]he FSIA explicitly prohibits jury trials in actions ‘against a foreign state.’” J.A.
881 (quoting 28 U.S.C. § 1330(a)). The letter also stated that “Counsel for . . . [the]
Defendants have reviewed this letter and approve its contents.” Id. at 880.
14
Holding that the Defendants had thereby consented to the Judgment Creditors’
withdrawal of their demands, the court declined to decide whether TRIA
litigants have the right to a jury trial.
The Trial and Judgment
The trial began as scheduled and lasted approximately one month. The
day after the trial ended, the district court issued a 155‐page opinion ruling in
favor of the Judgment Creditors on their FSIA § 1610(b)(3) and TRIA § 201
claims. See Kirschenbaum, 257 F. Supp. 3d at 466. Its key conclusion was that the
Government of Iran controlled Alavi and 650 Fifth Ave. Co. and used them to
conceal its property holdings within the United States.
The district court began its legal analysis by holding that it had subject
matter jurisdiction under the FSIA and TRIA. On the FSIA claims, it found that
650 Fifth Ave. Co. is Iran’s agency or instrumentality under § 1603(b) and its alter
ego under Bancec, that 28 U.S.C. § 1605A(a)(1) deprived the partnership of
foreign sovereign immunity, and that its property was not immune from
attachment and execution under § 1610(b)(3). On the TRIA claims, the court
concluded that the Defendants’ properties were “blocked assets” within the
15
meaning of TRIA and that the Defendants were agencies or instrumentalities of
Iran under the statute.
Accordingly, the district court entered judgment for the Judgment
Creditors on both their FSIA and TRIA claims. The Defendants timely appealed.
DISCUSSION
There are three issues on appeal. The first is whether the district court
erroneously found for the Judgment Creditors on their FSIA § 1610(b)(3) claims.
The second concerns the Defendants’ objections to several of the court’s
evidentiary rulings. The third challenges the court’s denial of the Defendants’
demand for a jury trial on the TRIA claims.
I. The District Court Violated Our Mandate and the Law of the Case
by Allowing the FSIA Claims to Proceed to Trial.
“A district court must follow the mandate issued by an appellate court.”
Puricelli v. Republic of Argentina, 797 F.3d 213, 218 (2d Cir. 2015).7 “[W]here an
issue was ripe for review at the time of an initial appeal but was nonetheless
foregone, the mandate rule generally prohibits the district court from reopening
the issue on remand unless the mandate can reasonably be understood as
7 “We review de novo whether the District Court has complied with our mandate.” Id.
16
permitting it to do so.” United States v. Ben Zvi, 242 F.3d 89, 95 (2d Cir. 2001).
“Where a mandate limits the issues open for consideration on remand, a district
court ordinarily cannot consider additional issues.” Puricelli, 797 F.3d at 218.
We directed the district court to consider two TRIA issues—and “only”
those two issues—on remand. Kirschenbaum, 830 F.3d at 142. The court violated
our mandate by allowing the Judgment Creditors to bring their FSIA § 1610(b)(3)
claims to trial.
That error alone requires reversal. But even if the mandate had left room
for consideration of the FSIA § 1610(b)(3) claims, we would still reverse because
the district court’s legal conclusions were contrary to the law of the case.
“When an appellate court has once decided an issue, the trial court, at a
later stage of the litigation, is under a duty to follow the appellate court’s ruling
on that issue.” Doe v. New York City Dep’t of Soc. Servs., 709 F.2d 782, 788 (2d Cir.
1983) (quoting United States v. Cirami, 563 F.2d 26, 32 (2d Cir. 1977)). Our 2016
decision held that the “Defendants do not qualify, as a matter of law, as the foreign
state of Iran . . . see 28 U.S.C. § 1603(a),” or as “agencies or instrumentalities of the
foreign state of Iran . . . see 28 U.S.C. § 1603(b),” or as “alter egos of Iran under
Bancec.” Kirschenbaum, 830 F.3d at 141 (emphasis added). Those holdings are the
17
law of the case. They prevent the Judgment Creditors from pursuing any FSIA
claim, because every FSIA claim requires that the defendant meet the definition of
a foreign state under § 1603.8
Presented with the same issues on remand, the district court reached the
opposite conclusions: that 650 Fifth Ave. Co. is a foreign state because it is Iran’s
“agency or instrumentality” under FSIA § 1603 and its alter ego under Bancec.
The court’s theory that our holdings applied only to the §§ 1610(a)(7) and (g)
claims, leaving it free to consider the issues anew for the § 1610(b)(3) claims,
seriously misperceives the law‐of‐the‐case doctrine. When the Court of Appeals
remands a matter to a district court, the lower court is bound not only by our
resolution of the claims before us, but also of the legal issues we decided in the
course of resolving those claims. We decided these issues “as a matter of law.”
The district court lacked the authority to disagree with our holdings.
8 See, e.g., 28 U.S.C. § 1330(a) (authorizing jurisdiction over “any nonjury civil action
against a foreign state as defined in section 1603(a)”); id. § 1610(b)(3) (abrogating
immunity over “property in the United States of an agency or instrumentality of a
foreign state engaged in commercial activity in the United States” where “the agency or
instrumentality is not immune by virtue of [§ 1605A]”); id. § 1605A (abrogating
immunity over certain “foreign state[s]”).
18
We reverse the judgment in favor of the Judgment Creditors and remand
for the court to enter judgment for 650 Fifth Ave Co. on the FSIA § 1610(b)(3)
claims.
II. The District Court Abused Its Discretion by Precluding Testimony
from Two Former Alavi Board Members.
In a companion opinion involving the Government’s overlapping civil‐
forfeiture trial against the Defendants, we conclude that the district court abused
its discretion by precluding testimony from two former Alavi board members.
See In re 650 Fifth Ave. & Related Props., No. 17‐3258(L) (2d Cir. 2019). As the same
issue arose in the bench trial below, we reach the same conclusion here. This
error was prejudicial to the Defendants. It therefore requires us to vacate the
judgment as to the TRIA claims and order a new trial. See id.
We thus decline to consider the Defendants’ arguments that the district
court erroneously ordered the turnover of their property under TRIA.9
9 The Defendants also raise numerous challenges to the district court’s evidentiary
rulings and ask that we reassign the case to a different judge on remand. Because we
vacate the judgment, and this case has already been reassigned, these issues are moot.
To the extent the parties believe that any of the challenged evidentiary issues will arise
once more on remand despite our decision to vacate the judgment, they may raise their
concerns with the district court.
19
III. No Right to a Jury Trial Attaches in TRIA Actions Seeking to Turn
Over Property Belonging to a State Sponsor of Terrorism or an
Agency or Instrumentality Thereof.
The final issue is whether the district court erroneously denied the
Defendants’ demand for a jury trial on the TRIA claims. Although our holding
vacating the judgment renders any error harmless, we must address this issue
because we have ordered a new trial and the issue will most likely present itself
again. “We review a district court’s decision to deny a jury trial de novo.”
Eberhard v. Marcu, 530 F.3d 122, 135 n.13 (2d Cir. 2008).
There are two issues here. The first is whether parties litigating under
TRIA § 201 have the right to a jury trial when the defendant is “foreign state
designated as a state sponsor of terrorism.” TRIA § 201. The second is whether, if
they do, the district court erroneously held that the Defendants waived their jury
right. We begin and end our discussion with the first question.10
The right to a jury trial in a civil action may come from either a statute or
the Seventh Amendment. Where a statute creates the right, the inquiry stops
10Although the district court addressed only the waiver issue, “we may affirm on any
basis for which there is sufficient support in the record, including grounds not relied on
by the District Court.” Ferran v. Town of Nassau, 471 F.3d 363, 365 (2d Cir. 2006).
20
there. See Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 345 (1998).
Where a statute does not authorize jury trials, we look to the Seventh
Amendment. TRIA is silent on the right to a jury trial.
The Seventh Amendment preserves the right to a jury trial in “Suits at
common law” where the amount in controversy exceeds twenty dollars. U.S.
Const. amend. VII; see also Fed. Hous. Fin. Agency for Fed. Nat’l Mortg. Ass’n v.
Nomura Holding Am., Inc., 873 F.3d 85, 135 (2d Cir. 2017). “In assessing whether a
given statutory provision entitles a party to a jury trial under the Seventh
Amendment, we look both [1] to the historical treatment of analogous cases and
[2] to the type of remedy available to determine whether a cause of action is one
of law (thus triggering the jury right) or one of equity (in which case no jury right
is available).” Brown v. Sandimo Materials, 250 F.3d 120, 126 (2d Cir. 2001). We
apply these factors by balancing them, mindful that “[t]he more important of
these two questions is that of the available remedy.” Id.
We need not pore through the English Reports to understand how the first
factor applies here. In Ruggiero v. Compania Peruana de Vapores “Inca Capac
Yupanqui,” 639 F.2d 872 (2d Cir. 1981) (Friendly, J.), the plaintiffs argued that
§ 1330(a) of the FSIA unconstitutionally deprived them of a jury right preserved
21
by the Seventh Amendment. See id. at 878. We disagreed. Finding “nothing to
show that a right of jury trial existed under the common law in 1791 with respect
to a suit against a foreign government or an instrumentality thereof,” we noted
that “such a suit could not be maintained at all.” Id. at 879.11
A TRIA § 201 claim is not a suit for a judgment, but rather one to enforce a
judgment already obtained. But Ruggiero makes clear that in eighteenth‐century
England, the judgment giving rise to a § 201 claim pled against a state sponsor of
terrorism could not have existed because citizens lacked the ability to sue foreign
states or their agencies and instrumentalities. No lawsuit meant no judgment,
and no judgment meant no attachment and execution of the foreign state’s
property.
11See also, e.g., Arango v. Guzman Travel Advisors, 761 F.2d 1527, 1534 (11th Cir. 1985)
(“[I]t is clear that suits against foreign governments or commercial entities controlled by
them only recently have been permitted to go forward. Even now, these lawsuits have
been allowed only because of a change in executive and legislative policy, not by
operation of common law principles—the law of liability of foreign sovereigns is in fact
sui generis. If these suits were not permitted in 1791, it is inexorably clear that no right to
a jury trial attached under the seventh amendment. . . . [T]he FSIA’s nonjury trial
requirement does not offend the seventh amendment.” (citations omitted)); Goar v.
Compania Peruana de Vapores, 688 F.2d 417, 426–27 (5th Cir. 1982) (“[S]uits against
foreign states were as unknown to the common law in 1791 as were suits against the
United States.”).
22
This finding is dispositive. The Seventh Amendment does not create a right
to a jury trial, but merely preserves the right that existed at common law. See U.S.
Const. amend. VII; Ruggiero, 639 F.2d at 879. It is impossible to say the Seventh
Amendment preserved a jury right in an action not maintainable at common law.
See Ruggiero, 639 F.2d at 879. For this reason, it is irrelevant that the more
important remedy factor points in favor of a jury trial.12
No right to a jury trial exists in TRIA § 201 actions seeking the attachment
and execution of property belonging to a state sponsor of terrorism, including its
agencies or instrumentalities.13 For this reason, we hold without addressing the
waiver finding that the district court did not erroneously deny the Defendants a
jury trial.
12Cf. Wm. Passalacqua Builders, Inc. v. Resnick Developers S., Inc., 933 F.2d 131, 136 (2d Cir.
1991) (holding that attachment suits are actions at law for Seventh Amendment
purposes because they primarily seek money damages).
13Our analysis here focuses on the common law history of actions against foreign states
and their agencies or instrumentalities. TRIA § 201 also allows for lawsuits against
terrorists and terrorist organizations. See TRIA § 201(d)(4). We need not and do not
decide whether the Seventh Amendment preserves a jury right in such cases.
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CONCLUSION
1. We REVERSE the judgment on the FSIA § 1610(b)(3) claims and
REMAND for the district court to enter judgment for 650 Fifth Ave. Co. on these
claims.
2. We REVERSE the district court’s orders precluding the former Alavi
board members from testifying. If these cases return to trial, the court shall
permit the Defendants to call them as witnesses.14
3. We VACATE the judgment on the TRIA § 201 claims, AFFIRM the
court’s decision denying a jury trial, and REMAND for a new bench trial on
these claims and only these claims.
14If the Judgment Creditors wish to depose the former board members before trial, the
court shall ensure that the Defendants make them available.
24