Spetner v. PIB ( 2023 )

20-3849-cv
Spetner v. PIB
In the
United States Court of Appeals
For the Second Circuit
________
AUGUST TERM 2021
ARGUED: FEBRUARY 25, 2022
DECIDED: JUNE 16, 2023
No. 20-3849-cv
Temima Spetner, Jason Kirschenbaum, Isabelle Kirschenbaum,
individually and for the Estate of Martin Kirschenbaum, Joshua
Kirschenbaum, Shoshana Burgett, David Kirschenbaum, Danielle
Teitelbaum, Netanel Miller, Chaya Miller, Aharon Miller, Shani
Miller, Adiya Miller, Altea Steinherz, Jonathan Steinherz, Temima
Steinherz, Joseph Ginzberg, Peter Steinherz, Laurel Steinherz,
Jacqueline Chambers, individually and as the Administrator of the
Estate of Esther Bablar, Levana Cohen, individually and as the
Administrator of the Estate of Esther Bablar, Eli Cohen, Sarah
Elyakim, Joseph Cohen, Greta Geller, as the Administrator of the
Estate of Greta Geller, Ilana Dorfman, as the Administrator of the
Estate of Greta Geller, Rephael Kitsis, as the Administrator of the
Estate of Greta Geller, Tova Guttman, as the Administrator of the
Estate of Greta Geller, Gila Aluf, Shabtai Shatsky, individually and
for the Estate of Keren Shatsky, Joanne Shatsky, individually and for
the Estate of Keren Shatsky, Tzippora Shatsky Schwarz, Yosef
Shatsky, Sara Shatsky Tzimmerman, Miriam Shatsky, David
Shatsky, Hillel Trattner, Ronit Trattner, Aron Trattner, Shelley
Trattner, Hadassah Diner, Efrat Fine, Yael Hillman, Chana Friedman
Edri, Bella Friedman, Reuven Friedman, Yehiel Friedman, Zvi
Friedman, Ilan Friedman, Miriam Friedman Schreiber, Steven Braun,
2 No. 20-3849
Chaviva Braun, Yehuda Braun, Yoni Braun, Eliana Braun Peretz,
Oriella Braun, Matanya Braun, Ginette Thaler, individually and for
the Estate of Rachel Thaler, Leor Thaler, Michael Thaler, Zvi Thaler,
Isaac Thaler, Miriam Ben-Yishai, individually and for the Estate of
Shoshana Ben-Yishai, Yitzhak Ben-Yishai, individually and for the
Estate of Shoshana Ben-Yishai, Jacob Ben-Yishai, Israel Ben-Yishai,
Aviel Ben-Yishai, Chana Ben-Yishai, Yael Ben-Yishai, Myriam
Miller, Chana Aidel Miller Schertzman, Tova Miller, Ilana
Schertzman Cohen, Leslie Schertzman, Donald Schertzman, Daniel
Schertzman, Arielle Schertzman Fisher, Abraham Schertzman,
Yehuda Schertzman, Charles O. Morgan, Jr., for the Estate of Gloria
Kushner, Leonard Mandelkorn, Ezra Kessler, Hannah Kessler
Rosenstein, Klila Kessler, Yitzhak Zahavy, Julie Zahavy, Tzvee
Zahavy, Bernice Zahavy, Mark Sokolow, Rena Sokolow, Jamie
Sokolow Fenster, Lauren Sokolow Mandelstam, Elana Sokolow
Rosman, Alan Bauer, Yehonaton Bauer, Revital Bauer, Binyamin
Bauer, Daniel Bauer, Yehuda Bauer, Ludwig Bauer, individually and
for the Estate of Ella Bauer, Phillip Bauer, Shoshana Zelcer
Weitzman, Shmuel Waldman, Henna Novack, Morris Waldman,
Eva Waldman, Chanie Bodenstein, Shaindy Weinberger, Philip
Waldman, Abraham Waldman, Dassie Waldman Davis, Leslye
Knox, individually and for the Estate of Aharon Ellis, Jordan Ellis,
Mello Nee Ellis, individually and for the Estate of Prince Elkannann
Ben Shaleak, Ametai Carter, Reuven Carter, Shaanon Carter,
Shayrah Carter, Yoshahvyah Carter, Francine Ellis, Lynne Ellis,
Shemariyah Ellis, Tsaphrerah Ellis, Yihonadov Ellis,
Plaintiffs-Appellants,
Arie Miller,
Plaintiff,
v.
3 No. 20-3849
Palestine Investment Bank,
Defendant-Appellee.
________
Appeal from the United States District Court
for the Eastern District of New York.
________
Before: WALKER, MENASHI, and LEE, Circuit Judges.
________
Plaintiffs-Appellants are American victims, and the relatives
and estates of victims, of terrorist attacks in Israel between 2001 and
2003. Plaintiffs allege that Palestine Investment Bank (PIB) facilitated
the attacks by knowingly providing financial services to the terrorist
organizations that allegedly perpetrated them, in violation of the
Anti-Terrorism Act, 18 U.S.C. § 2213-39D. The district court
dismissed the case on the ground that it lacked personal jurisdiction
over PIB. For the reasons that follow, we VACATE the district court’s
decision and REMAND for proceedings consistent with this opinion.
________
MICHAEL RADINE (Gary M. Osen, Ari Ungar,
Aaron A. Schlanger, on the brief), Osen LLC,
Hackensack, NJ, for Plaintiffs-Appellants.
MITCHELL R. BERGER (Gassan A. Baloul, on the
brief), Squire Patton Boggs, New York, NY and
Washington, DC, for Defendant-Appellee.
4 No. 20-3849
Gregory P. Hansel, Preti, Flaherty, Beliveau &
Pachios, Chartered LLP, Portland, ME, for amici
curiae Former United States Government Officials.
Douglass A. Mitchell, Jenner & Block LLP,
Washington, DC; Mordechai Biser, Abba Cohen,
Agudath Israel of America; Nathan J. Diament,
Union of Orthodox Jewish Congregations of
America; Jonathan L. Sherman, One Israel Fund,
Ltd., for amici curiae Agudath Israel of America, Union
of Orthodox Jewish Congregations of America, and One
Israel Fund, Ltd.; Jonathan M. Rotter, Glancy
Prongay & Murray LLP, Los Angeles, CA, for
amicus curiae StandWithUs.
________
JOHN M. WALKER, JR., Circuit Judge:
Plaintiffs-Appellants are American victims, and the relatives
and estates of victims, of terrorist attacks in Israel between 2001 and
2003. Plaintiffs allege that Palestine Investment Bank (PIB) facilitated
the attacks by knowingly providing financial services to the terrorist
organizations that allegedly perpetrated them, in violation of the
Anti-Terrorism Act, 18 U.S.C. § 2213-39D. The district court
dismissed the case on the ground that it lacked personal jurisdiction
over PIB. For the reasons that follow, we VACATE the district court’s
decision and REMAND for proceedings consistent with this opinion.
BACKGROUND
The following facts are taken from plaintiffs’ complaint and
declaration to the extent “they are uncontroverted by [PIB’s]
5 No. 20-3849
affidavits.” 1 Plaintiffs’ claims arise from thirteen attacks allegedly
committed by Hamas and terrorists supported by the Arab Liberation
Front (ALF) during the “Second Intifada.” 2
PIB is a commercial bank headquartered in the Palestinian
Territories. During the relevant period, PIB maintained a U.S. dollar-
denominated checking account for the head of the ALF, a Palestinian
proxy for Saddam Hussein’s regime in Iraq. Plaintiffs allege that
Saddam Hussein’s government transferred so-called incentive
payments to ALF’s account at PIB to support and reward terrorist
activities. Plaintiffs estimate that the Iraqi government transferred to
ALF between $9.5 million and $35 million, which was ultimately
disbursed to families of deceased terrorists, primarily through PIB-
issued checks.
PIB also maintained an account for Hamas’s U.S.-based
fundraising arm, the Holy Land Foundation (HLF). HLF wired
dollars from accounts in the United States to its account with PIB in
the Palestinian Territories, which was then used to finance Hamas’s
operations. The United States designated Hamas as a Foreign
1 MacDermid, Inc. v. Deiter, 702 F.3d 725, 727 (2d Cir. 2012).
2 The “Second Intifada” refers to “a period of intensified violence by
Palestinian terrorist groups in the aftermath of failed peace negotiations
between Israel and the Palestinian Authority in September 2000.” Linde v.
Arab Bank, PLC, 882 F.3d 314, 319 (2d Cir. 2018). Although the Second
Intifada lasted until 2005, plaintiffs narrow the “relevant period” for their
claims to attacks committed between September 2001 and March 2003.
6 No. 20-3849
Terrorist Organization in 1997 and HLF as a Specially Designated
Global Terrorist in December 2001. 3
During the relevant period, PIB had no offices, branches, or
employees in New York. A foreign bank that lacks a physical
presence in the United States, such as PIB, cannot directly access U.S.-
based payment systems that allow financial institutions to
electronically transfer dollar-denominated funds. But it can move
funds to and from the United States by using a correspondent
banking account, which is an account in a domestic bank that is held
in the foreign bank’s name. 4 PIB did not hold a correspondent
banking account in its own name with any bank in the United States.
To process dollar-denominated transfers, PIB instead used a
correspondent account with the Amman-branch of Arab Jordan
Investment Bank (AJIB). AJIB, in turn, held correspondent banking
accounts at three banks in New York—Citibank, Chase Manhattan,
and Bank of New York Mellon. This practice, sometimes referred to
as “nested” correspondent banking, afforded PIB indirect access to
New York’s financial system and dollar-based transfer services.
AJIB’s New York correspondent accounts were the only means
it used to process dollar-based transactions. AJIB advertised its
correspondent account relationships in trade publications such as the
3 While the United States did not formally designate HLF as a Special
Designated Global Terrorist until December 2001, coverage from the New
York Times in 1996 detailed HLF’s role as a “key fundraising operation” for
Hamas, and the Israeli government declared in 1997 that HLF routinely
transferred funds on behalf of Hamas. Joint App’x 186.
4 Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 165 n.3
(2d Cir. 2013) (“Licci IV”) (analogizing a correspondent bank account to “a
personal checking account used for deposits, payments and transfers of
funds” (internal quotation marks omitted)).
7 No. 20-3849
Bankers’ Almanac, which listed only the three New York accounts as
having dollar-processing capabilities. Because of these public
disclosures, PIB knew that the wire transfers had to route through
New York. While there are alternatives to processing transactions
through New York, PIB did not seek them out, nor did PIB refuse
transfers from AJIB despite knowing that they would be routed
through New York.
PIB used nested correspondent accounts to funnel dollar-
denominated payments from Iraq’s government to ALF. From an
originating bank, Iraqi funds were sent to AJIB’s correspondent
account in New York. Once the funds reached AJIB’s account, AJIB
notified PIB that a transfer was made for the benefit of a PIB account
holder, which, in this case, was the head of the ALF. Drawing on
these cash infusions from Iraq, the head of the ALF then issued dollar-
denominated incentive payment checks from his PIB account to the
families of terrorists, including the word “martyr” in the memo line
of some checks.
Except for checks issued to ultimate recipients who were also
PIB accountholders (which were cleared internally on PIB’s books),
the incentive payment checks were cleared and settled in New York
before reaching their ultimate recipients’ accounts at other banks. 5
PIB also repeatedly processed payments for HLF. Plaintiffs
allege that PIB directed HLF to use AJIB’s New York correspondent
accounts when transferring funds between HLF’s account in the
United States and its account with PIB in the Palestinian Territories.
5 “Clearing” refers to transmitting and reconciling transactions
between or among parties; “settling” is the actual transfer of funds between
the sending and receiving financial institutions. Joint App’x 217–18.
8 No. 20-3849
Plaintiffs point to at least one transfer from August 2001, in which
HLF wired funds from its account in Texas with instructions that the
transfer route through AJIB’s correspondent account with Chase
Manhattan in New York. Because PIB did not advertise its
correspondent accounts at the time, plaintiffs suggest that the only
way HLF could have known to send its funds to that correspondent
account in New York was if PIB had selected the specific account and
instructed HLF to use it.
PIB moved to dismiss the complaint on the ground that its
connections with New York were too attenuated to subject it to
personal jurisdiction. The district court held oral argument on the
motion but did not conduct an evidentiary hearing. It granted PIB’s
motion, ruling that New York’s long-arm statute, Civil Practice Law
and Rule (C.P.L.R.) § 302, did not authorize jurisdiction over PIB. The
district court reasoned that the New York correspondent accounts at
issue were not held in PIB’s name and that AJIB was not PIB’s agent
for purposes of § 302. The district court did not reach whether
jurisdiction was consistent with the Due Process Clause of the
Constitution or whether, as PIB argued, plaintiffs failed to state a
claim. Plaintiffs timely appealed.
DISCUSSION
This appeal requires us to answer a single question: whether
the district court has personal jurisdiction over PIB. Federal Rule of
Civil Procedure 4(k)(1)(A) permits a federal court to exercise personal
jurisdiction over a defendant to the extent allowed by the law of the
state in which it sits. If New York’s long-arm statute authorizes
9 No. 20-3849
jurisdiction, we then consider whether jurisdiction comports with
constitutional due process principles. 6
We review a district court’s decision on the question of
personal jurisdiction “for clear error on factual holdings and de novo
on legal conclusions.” 7 “[W]hether an agency relationship exists is a
mixed question of law and fact.” 8 Where, as here, the district court
did not conduct a “full-blown evidentiary hearing,” relying instead
on pleadings and affidavits, the plaintiff need only make a prima facie
showing that jurisdiction exists. 9
I. Jurisdiction Under New York’s Long-Arm Statute
C.P.L.R. § 302(a)(1) authorizes personal jurisdiction over a
foreign defendant for causes of action that arise out of “transact[ing]
any business within the state,” whether in person or through an
agent. 10 Transacting business in this context means “purposeful
activity—some act by which the defendant purposefully avails itself
of the privilege of conducting activities within the forum State, thus
6 Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). PIB does not
challenge plaintiffs’ service of process, which is also required for personal
jurisdiction. Waldman v. Palestine Liberation Org., 835 F.3d 317, 327 (2d Cir.
2016).
7 Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L., 264
F.3d 32, 36 (2d Cir. 2001).
8 Id.9 DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001) (per
curiam).
10 C.P.L.R. § 302(a)(1) (“[A] court may exercise personal jurisdiction
over any non-domiciliary . . . who in person or through an agent . . .
transacts any business within the state or contracts anywhere to supply
goods or services in the state.”).
10 No. 20-3849
invoking the benefits and protections of its laws.” 11 A defendant may
be subject to personal jurisdiction even if it “never enters New York,
so long as the defendant’s activities here were purposeful and there
is a substantial relationship between the transaction and the claim
asserted.” 12
A. Transacting Business in New York
Both our court and the New York Court of Appeals have on
several occasions addressed whether the use of a correspondent bank
account involves transacting business and therefore can support the
exercise of jurisdiction over a non-domiciliary bank. The most
notable of these precedents is the Licci ex rel. Licci v. Lebanese Canadian
Bank, SAL line of cases. 13 Licci supplies two relevant principles. First,
the existence of a correspondent account in New York, without more,
does not subject a defendant foreign bank to long-arm jurisdiction. 14
But, second, a defendant foreign bank’s “repeated use of a
correspondent account in New York on behalf of a client—in effect, a
‘course of dealing’”—can constitute transacting business for purposes
11 Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007)
(internal quotation marks omitted).
12 Fischbarg v. Doucet, 9 N.Y.3d 375, 380 (2007) (internal quotation
marks omitted).
13 See generally Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673
F.3d 50 (2d Cir. 2012) (“Licci II”); Licci ex rel. Licci v. Lebanese Canadian Bank,
SAL, 20 N.Y.3d 327 (2012) (“Licci III”); Licci IV, 732 F.3d 161; see also Al
Rushaid v. Pictet & Cie, 28 N.Y.3d 316 (2016); Amigo Foods Corp. v. Marine
Midland Bank-N.Y., 39 N.Y.2d 391 (1976).
14 Licci III, 20 N.Y.3d at 337–38; Amigo Foods, 39 N.Y.2d at 396.
11 No. 20-3849
of § 302(a)(1), even if the defendant has no other contacts with the
forum. 15
Because the touchstone for jurisdiction under New York’s long-
arm statute is the intent to reach the forum, jurisdiction cannot be
based on conduct in the forum that is extraneous or coincidental. As
the New York Court of Appeals recently clarified, “[i]t is precisely the
fact that defendants chose New York, when other jurisdictions were
available, that makes the New York connection ‘volitional’ and not
‘coincidental.’” 16 We were satisfied in Licci that the foreign bank’s
recurrent transfers to a New York correspondent account indicated “a
lack of coincidence” and a desire to benefit from New York’s
“dependable and transparent banking system.” 17
While the foreign bank in Licci executed the challenged
transactions through a correspondent account that it had opened in
New York, our decision did not cabin jurisdiction to only the owner of
the correspondent account. This case asks us to consider whether
jurisdiction can be based on a foreign bank’s use of a correspondent
account that it does not own. As we explain below, a foreign bank’s
choice to project itself into New York can be evident through the
selection and repeated use of an agent’s correspondent account in the
forum. This result follows from two strands of well-established
jurisprudence. A foreign entity can be subject to suit in New York
based on the acts of its agent. And sustained use of a correspondent
15Licci III, 20 N.Y.3d at 339 (emphasis added); see Al Rushaid, 28
N.Y.3d at 325–27.
16 Al Rushaid, 28 N.Y.3d at 328.
17 Licci IV, 732 F.3d at 168, 171 (quoting Licci III, 20 N.Y.3d at 339–40).
12 No. 20-3849
banking account constitutes “transacting business” within the
meaning of § 302(a)(1).
Plaintiffs allege that AJIB acted as PIB’s agent when it
repeatedly facilitated and processed funds transfers to PIB’s dollar-
denominated accounts. Agency within the meaning of § 302(a) is
given a “broad[]” interpretation. 18 A plaintiff does not need to
establish a “formal agency relationship” in order to attribute the
actions of the agent to the principal. 19 To exercise personal
jurisdiction over a defendant based on the acts of an agent, a showing
must be made that “the alleged agent acted in New York for the
benefit of, with the knowledge and consent of, and under some
control by, the nonresident principal.” 20
We easily find that plaintiffs successfully pled benefit as well
as knowledge and consent. As for the former, AJIB’s alleged role in
transferring payments through its correspondent accounts in New
York redounded to PIB’s benefit. While a foreign bank can
theoretically bypass the United States to clear dollars—for example,
at an offshore Federal Reserve-sanctioned clearing center—these
processing mechanisms presumably lack the “cost savings or other
conveniences” that New York correspondent accounts offer. 21
Accepting the complaint’s allegations as true (as we must at this
stage), PIB did not use these alternative systems. The account with
18 Grove Press, Inc. v. Angleton, 649 F.2d 121, 122 (2d Cir. 1981).
19 Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988).
20 Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68, 85 (2d Cir.
2018) (quoting Grove Press, Inc., 649 F.2d at 122).
21 Licci IV, 732 F.3d at 171; see also Licci III, 20 N.Y.3d at 340(speculating that routing transactions through New York was “cheaper and
easier for [the foreign bank] than other options”).
13 No. 20-3849
AJIB enabled PIB to offer dollar-denominated banking to its
customers without establishing a direct physical presence in New
York or incurring the costs of clearing dollars abroad. As for the
knowledge requirement, PIB conceded at oral argument that
plaintiffs plausibly allege that it had knowledge of AJIB’s activities; 22
in addition, PIB repeatedly accepted incoming dollar-denominated
payments from AJIB, evidencing its consent that AJIB act on its behalf
in effectuating the transfer through AJIB’s correspondent accounts in
New York.
We disagree with the district court’s conclusion that the
complaint failed to plausibly allege that PIB exercised “some control”
over AJIB. To start, PIB conceded that AJIB was required to follow
PIB’s instructions as to the amount of funds to transfer and the
beneficiary of those funds. 23 AJIB could not choose to transfer a
different amount for the benefit of a PIB customer or transfer to a
beneficiary of AJIB’s own choosing. PIB acknowledged that, “[i]n the
event” that a request was made by a PIB customer, PIB instructed
AJIB to make certain transfers “to the U.S. bank.” 24 AJIB did not
ignore or reject those instructions. These allegations indicate that
AJIB’s conduct vis-à-vis the correspondent account was not
“unilateral.” 25
22 Hr’g Tr. 22:10–30. To bolster their allegations of PIB’s knowledge
of AJIB’s activities, plaintiffs also introduced evidence suggesting that the
two banks were “related,” including a credit report from PIB stating that
PIB “has close connections with [AJIB]” and “shar[es] the same chairman.”
Joint App’x 223–24, 245.
23 Hr’g Tr. 23:00–20.
24 Joint App’x 213.
25 Rushaid, 28 N.Y.3d at 326, 328.
14 No. 20-3849
Once PIB chose to offer dollar-denominated banking services,
it necessarily exercised control by utilizing AJIB’s correspondent bank
accounts in New York. Contrary to the district court’s determination,
the absence of allegations that PIB routinely designated which of
AJIB’s three correspondent accounts to use in New York is of no
moment because PIB had already selected the forum and any of the
three banks would do. Section 302(a)(1) does not demand that the
principal exercise complete control over every decision of the putative
agent. 26 AJIB’s three correspondent accounts with New York banks
during the relevant period were a matter of public knowledge. AJIB
did not advertise any alternative dollar-clearing centers that were
outside of New York. Accepting the allegations in the complaint as
true, PIB did not seek out any alternative clearing centers and did not
direct AJIB to avoid New York. Furthermore, the relevant
transactions were not routed through any other correspondent
account. It is thus a plausible reading of the complaint that processing
the payments through New York was part of PIB’s design.
We also find plausible plaintiffs’ allegations that PIB exercised
control over the transactions by directing its customers to use certain
correspondent accounts in New York. Plaintiffs allege that, on at least
one occasion, HLF transferred funds from its Texas-based account to
its account at PIB with instructions on the payment form to use AJIB’s
correspondent account at Chase Manhattan in New York. Because
PIB did not advertise its correspondent accounts, we can reasonably
infer that PIB designated one of AJIB’s correspondent accounts and
then instructed HLF to send its funds there, thereby controlling the
flow of funds and ensuring that they would pass through New York.
26 CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 366 (2d Cir. 1986).
15 No. 20-3849
While New York remains “the national and international center
for wholesale wire transfers,” alternative channels that bypass the
State existed at the time that would have enabled PIB to provide
dollar-denominated banking services to its clients. 27 For example, PIB
could have sought out dollar-clearing centers outside of the U.S. 28 It
also could have arranged to keep sufficient U.S. banknotes on hand
for entirely physical, rather than electronic, funds transfers. That
these alternatives may have been less attractive to PIB is further
support that the purpose of holding a correspondent account with
AJIB was to gain convenient access to New York’s financial system.
The fact that PIB injected itself into the payment process leads us to
conclude that its contact with New York was not random or fortuitous
but sufficiently purposeful to satisfy New York’s long-arm statute.
PIB makes several arguments against the exercise of personal
jurisdiction on these facts. It relies on Article 4A of the New York
Uniform Commercial Code for the proposition that “[a] receiving
bank is not the agent of the sender or beneficiary of the payment order
it accepts, or of any other party to the funds transfer.” 29 But agency
under § 302 is not bound either by the “formalities of agency law” 30
or by the UCC’s framework governing a party’s rights and obligations
27 Banque Worms v. BankAmerica Int'l, 77 N.Y.2d 362, 370 (1991).
28 As an example, the Clearing House Automated Transfer System
(CHATS), based in Hong Kong and active since 2000, can settle U.S. dollar-
denominated transfers through The Hongkong and Shanghai Banking
Corporation. Access to the system for non-Hong Kong-based banks,
however, must be approved on a case-by-case basis. See
https://www.hkma.gov.hk/eng/key-functions/international-financial-
centre/financial-market-infrastructure/payment-systems/.
29 N.Y. U.C.C. § 4-A-212.
30 CutCo Indus., 806 F.2d at 366.
16 No. 20-3849
when making electronic funds transfers. 31 Moreover, the cases that
PIB cites involved parties seeking to attach or garnish assets that were
“midstream,” in other words assets that were in the process of being
transferred between banks. 32 We thus understand Article 4A to
qualify the court’s attachment power in the context of international
funds transfers, separate from the threshold question of whether the
court has personal jurisdiction over the bank involved in the transfer.
PIB also asserts that Licci rejected jurisdiction over foreign
banks using nested correspondent accounts and that finding
otherwise would “undo” Licci. 33 We disagree. In Licci, we considered
whether New York’s long-arm statute provided for personal
jurisdiction over a foreign bank that maintained a correspondent
account with a New York bank. The Licci plaintiffs alleged that
defendant Lebanese Canadian Bank, SAL (LCB), a Lebanese bank
with no operations in the United States, used its New York
correspondent account to transfer U.S.-dollar-denominated funds to
Hizballah, a terrorist organization. After certifying the question to
the New York Court of Appeals, we explained that “the use of a New
York correspondent bank account, standing alone, may be considered
a ‘transaction of business’ under the long-arm statute if the
defendant’s use of the correspondent account was purposeful.” 34 PIB
relies instead on our observation that LCB “could have . . . processed
U.S.-dollar-denominated wire transfers for [the terrorist
organization’s] account through correspondent accounts anywhere in
31 See Exp.-Imp. Bank of U.S. v. Asia Pulp & Paper Co., Ltd., 609 F.3d 111,
118 (2d Cir. 2010).
32 See, e.g., id. at 121.
33 Appellee’s Br. 3.
34 Licci IV, 732 F.3d at 168.
17 No. 20-3849
the world.” 35 In making that observation, we contrasted LCB’s use of
a correspondent account in New York with a foreign bank that had
correspondent relationships throughout the world any of which
could have been used to process transfers. According to PIB, this
statement in Licci demonstrates that the district court cannot exercise
jurisdiction over PIB here because PIB did not itself have a
correspondent account in New York but had only a correspondent
account with AJIB in Jordan. 36 We do not adopt PIB’s cramped
reading of Licci. To the contrary, we understand the Licci dicta to
stand for the unsurprising proposition that jurisdiction requires a
choice by the defendant bank to avail itself of the benefits of the New
York financial system. Simply transacting in U.S. dollars does not
make a defendant bank amenable to suit in New York. PIB, like LCB,
chose to transact business in New York—albeit one step removed,
through a nesting correspondent mechanism.
B. Claims “Arising from” Business Transacted in New
York
Plaintiffs likewise plausibly allege that their causes of action
arise out of PIB’s transacting business in New York. This second
element of § 302(a)(1) is satisfied “when there exists an articulable
nexus or a substantial relationship between transactions occurring
within the state and the cause of action sued upon.” 37 This “relatively
35 Id. at 171.
36 See Appellee’s Br. 24–25.
37 Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 23 (2d Cir. 2004)
(internal quotation marks omitted).
18 No. 20-3849
permissive” inquiry requires only that “at least one element [of the
claim] arises from [defendant’s] New York contacts.” 38
Plaintiffs allege that PIB’s use of correspondent accounts
through its agent, AJIB, permitted Saddam Hussein’s government to
funnel dollars repeatedly to ALF to enable it to incentivize and
reward terrorist activity and also permitted Texas-based HLF to send
funds from the United States to Hamas to support attacks perpetrated
on plaintiffs and their families. By processing payments bearing
indicia of terrorism financing on behalf of ALF and knowingly
providing material support to a customer linked to Hamas, a
designated Foreign Terrorist Organization, PIB facilitated the attacks
that are at the heart of this litigation. At this stage, we accept
plaintiffs’ allegations as true and find that they make out an
articulable nexus between PIB’s alleged conduct and their injuries.
PIB pushes back on the inference that the incentive payments
were processed through New York. Because checks between account
holders at Palestinian banks were settled daily on an aggregate basis
rather than as individual transactions, PIB suggests that plaintiffs
cannot trace any particular payment from the head of ALF to the
families of terrorists. But PIB admits that any inter-bank dollar
transfer to settle a debt was processed through New York. We find it
plausible that, of the transfers alleged to have originated with ALF, at
least some portion of them was transferred through New York. At
this stage of the litigation, plaintiffs are not obligated to produce
particularized proof as to each payment. They have met their burden
here because they averred facts and produced copies of checks and
38 Licci III, 20 N.Y.3d at 341.
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receipt vouchers from ALF to families of terrorists. 39 Moreover, it is
not disputed that funds transferred from Iraq’s government to ALF’s
account at PIB, from which the incentive payments were disbursed,
were processed through New York.
PIB also argues that plaintiffs omit a “causal connection”
between the funds transferred from HLF’s Texas-based account to its
account at PIB and plaintiffs’ injuries from Hamas’s terrorist
operations. 40 PIB’s argument reflects a fundamental
misunderstanding of the “arising from” requirement. The nexus
element simply ensures that the transaction is “not completely
unmoored” from the claim. 41 Plaintiffs’ allegations are sufficient: by
directing the transfers to AJIB’s account in New York, PIB used New
York’s financial system to facilitate financial support for Hamas that
is the basis of certain of plaintiffs’ claims.
We are similarly not persuaded by PIB’s alternative attempt to
narrow the scope of the nexus requirement. PIB argues that the
August 2001 transfers, which plaintiffs included for illustrative
purposes, lack a connection to the plaintiffs’ case because they
occurred a week before the start of the “relevant period.” 42 We
disagree. Plaintiffs’ allegation that PIB supplied HLF with
instructions on how to send dollar-based transfers to AJIB’s
39Joint App’x 200–05.
40Appellee’s Br. 47.
41 Licci III, 20 N.Y.3d at 339.
42 Plaintiffs define the “relevant period” as between September 2001
and March 2003 based on Congress’s extension of a statute of limitations
for Anti-Terrorism Act claims arising on or after September 11, 2001.
20 No. 20-3849
correspondent account in New York shortly before the attacks is
sufficiently contemporaneous.
II. Compliance with Constitutional Due Process
Because it concluded that personal jurisdiction was not
authorized by § 302(a)(1), the district court had no reason to address
whether the exercise of long-arm jurisdiction would also comport
with due process. Because we conclude that there is personal
jurisdiction under § 302(a)(1), we now turn to that question on
appeal. 43
Where, as here, specific jurisdiction is invoked, the Due Process
Clause of the Constitution requires that the defendant have sufficient
“minimum contacts” with the forum and that jurisdiction “not offend
traditional notions of fair play and substantial justice.” 44 Historically,
when we have found § 302(a)’s requirements satisfied based on an
agent’s contacts with the forum, we have not suggested that due
process requires something more than New York law. 45 Nevertheless,
we must independently ensure that the constitutional requirements
are satisfied. 46
“Minimum contacts” requires finding that PIB directed its
conduct at New York such that it could reasonably foresee being
subject to suit here. To be sure, there is no evidence that PIB was
physically present in New York, let alone the United States, but PIB
43MacDermid, 702 F.3d at 729–30.
44Int’l Shoe, 326 U.S. at 316 (internal quotation marks omitted).
45 Charles Schwab, 883 F.3d at 85; see also Licci IV, 732 F.3d at 168(observing that it would be “rare” for personal jurisdiction to be permitted
under § 302(a) and to nonetheless be found unconstitutional).
46 See Licci IV, 732 F.3d at 170.
21 No. 20-3849
had repeated contact with New York through AJIB’s correspondent
accounts. While the contacts with the forum must be “created by the
defendant itself,” we also recognize that the “defendant can
purposefully avail itself of a forum through the action of a third party
by directing its agents . . . to take action there.” 47 We find the
allegations of PIB’s contacts through its agent AJIB sufficient to satisfy
due process for the same reason that New York’s long-arm statute is
satisfied.
Due process ensures that the foreign defendant is not haled into
the forum based solely on the “unilateral activity” of a third party. 48
But, as we noted, PIB’s use of a New York account through AJIB
overcomes any claim that AJIB’s acts were “unilateral.” PIB chose to
accept dollar-denominated transfers from Iraq and HLF through the
use of a correspondent bank account. PIB’s relationship with AJIB
provided not only a way to clear dollar-denominated transfers on
behalf of ALF and HLF, but also the exclusive means of doing so. As
PIB knew, AJIB could not facilitate the transfers through alternative
jurisdictions. Moreover, AJIB acted at PIB’s direction: avoiding New
York would have required AJIB to ignore PIB’s instructions, which
PIB concedes AJIB did not do.
Likewise, HLF did not route its transfers from Texas through
New York at its own discretion. Accepting the complaint’s
allegations as true, PIB affirmatively directed HLF to send its money
to a specific correspondent account in New York to which PIB had
47 Schwab Short-Term Bond Mkt. Fund v. Lloyds Banking Grp. PLC, 22
F.4th 103, 122 (2d Cir. 2021), cert. denied, 142 S. Ct. 2852 (2022) (internal
quotation marks, citations, and emphasis omitted).
48 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474–75 (1985) (internal
quotation marks omitted).
22 No. 20-3849
access through its own account with AJIB. PIB thus oversaw the flow
of funds moving from its customer’s account in Texas to New York to
the Palestinian Territories. The New York account was not random;
it was necessary to effect the transfers.
We are also satisfied that PIB’s use of AJIB’s correspondent
account in New York was sufficiently related to plaintiffs’ injuries
because it was “an instrument to achieve the very wrong alleged.” 49
As we explained in Licci: where the cause of action entails the
“unlawful provision of banking services of which the wire transfers
are a part[,] allegations of [the defendant bank’s] repeated, intentional
execution of U.S.-dollar-denominated wire transfers on behalf of [its
clients]” in order to support terrorist activity are sufficient for
jurisdiction. 50 Plaintiffs sufficiently allege facts to support the
conclusion that New York was integral to the wrongful conduct.
At this juncture, we are interested only in the question of
personal jurisdiction and the nature of the contacts that would
support such exercise. PIB’s argument that HLF was not designated
a terrorist organization until several months into the relevant period
is more properly raised in a Rule 12(b)(6) challenge.
A defendant who has been found to have minimum contacts
can defeat jurisdiction by “present[ing] a compelling case that the
presence of some other considerations would render jurisdiction
unreasonable.” 51 PIB did not argue before the district court that being
haled into the New York forum would be unreasonable. Nor does
PIB so contend on appeal. In any event, we do not find this to be the
49 Licci IV, 732 F.3d at 171.
50 Id.51 Burger King, 471 U.S. at 477.
23 No. 20-3849
“unusual” case where dismissal is warranted because bringing PIB
into a New York court would be unreasonable. 52 Claims brought
under the Anti-Terrorism Act routinely involve international
defendants. We are cognizant of New York’s interest in “monitoring
banks and banking activity to ensure that its system is not used as an
instrument in support of terrorism,” which is perhaps heightened
given that nested correspondent accounts could permit a bank, like
PIB, to shield its identity from the New York banks or other interested
parties. 53 Moreover, we are satisfied that “the conveniences of
modern communication and transportation,” including email and
remote video capabilities, support our finding that PIB’s appearance
in New York would not be fundamentally unfair. 54
CONCLUSION
For the foregoing reasons, we VACATE the district court’s
decision and REMAND for further proceedings consistent with this
opinion. 55
52 Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 575 (2d Cir.
1996).
Licci IV, 732 F.3d at 174.
53
Id. (internal quotation marks omitted).
54
55 Because we find jurisdiction based on an agency relationship with
AJIB, we do not reach plaintiffs’ alternative theory that jurisdiction is
predicated on PMA being PIB’s agent.
We express no opinion as to the merits of PIB’s alternative argument
that plaintiffs fail to state a claim under the Anti-Terrorism Act. We leave
resolution of that issue for the district court to address in the first instance.