Stanley Boim v. American Muslims for Palestine ( 2021 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 20-3233
STANLEY BOIM, individually and as Administrator of the
ESTATE OF DAVID BOIM, and JOYCE BOIM,
Plaintiffs-Appellants,
v.
AMERICAN MUSLIMS FOR PALESTINE, et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:17-cv-03591 — Sharon Johnson Coleman, Judge.
____________________
ARGUED MAY 27, 2021 — DECIDED AUGUST 16, 2021
____________________
Before KANNE, SCUDDER, and KIRSCH, Circuit Judges.
SCUDDER, Circuit Judge. In 1996 David Boim was shot and
killed by Hamas terrorists while studying abroad in Israel.
His parents later sued several American nonprofit organiza-
tions for their role in funding Hamas and secured a $156 mil-
lion judgment under the federal Anti-Terrorism Act. Those or-
ganizations then shuttered, leaving Stanley and Joyce Boim
mostly empty handed. So in 2017 they filed a new lawsuit
2 No. 20-3233
against two different American entities and three individuals,
alleging that these new defendants are alter egos of the now-
defunct nonprofit organizations and therefore liable for the
remainder of the $156 million judgment.
In the new lawsuit, the district court allowed limited juris-
dictional discovery, decided the new entities and individuals
were not alter egos of the defunct nonprofits, and then dis-
missed the action for lack of subject matter jurisdiction. This
should not have happened, for the district court’s finding on
the alter ego question constituted a merits determination that
went beyond a proper jurisdictional inquiry. Because the
Boims’ new lawsuit arises under the Anti-Terrorism Act, the
district court possessed federal jurisdiction and should have
allowed the case to proceed on the merits, consistent with the
ordinary course of civil litigation. We therefore reverse and
remand for renewed proceedings.
I
A
The tragic end to David Boim’s life marked the beginning
of a decades-long effort by his parents to hold those responsi-
ble to account. David, a 17-year-old American citizen, was
studying in Israel when two Hamas terrorists shot him in the
head at a bus stop near Jerusalem in 1996. David’s parents re-
sponded by suing several United States-based organizations
and individuals under the civil liability provision of the Anti-
Terrorism Act. See 18 U.S.C. § 2333(a) (1992). This statute cre-
ates a federal cause of action by providing any United States
national (or his estate, survivors, or heirs) with a right to sue
in federal court and to recover treble damages for injuries re-
sulting from an act of international terrorism. See id.No. 20-3233 3
The Boims alleged that the defendant organizations and
individuals fundraised for and funneled money to Hamas op-
eratives in the West Bank and Gaza, who in turn used those
funds to carry out the attack on David. In that way, the Boims
contended, these entities provided material support or re-
sources to terrorism and to a foreign terrorist organization in
violation of 18 U.S.C. §§ 2339A and 2339B, and therefore were
civilly liable under § 2333(a) for David’s killing.
Although the murder occurred overseas, the Boims filed
their action in federal court in Chicago because several of the
organizational defendants maintained offices in the Northern
District of Illinois. The case proceeded to summary judgment,
and the district court determined that the evidence compelled
a finding that three defendants were liable under § 2333(a):
the Islamic Association for Palestine (which also went by the
name American Muslim Society); Holy Land Foundation for
Relief and Development; and one individual named Moham-
med Abdul Hamid Khalil Salah. A jury convened to assess
damages and returned an award for the Boims, holding the
defendants jointly and severally liable for $52 million, which
the district court then tripled to $156 million under the treble-
damages clause Congress included in § 2333(a). The district
court entered this judgment in December 2004.
On appeal, we affirmed the judgment against the Islamic
Association but reversed as to Holy Land Foundation and Sa-
lah. See Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685,
701 (7th Cir. 2008) (Boim III) (en banc). On remand, the district
court again found Holy Land jointly and severally liable un-
der § 2333(a). See Boim v. Quranic Literacy Inst., No. 00 C 2905,
2012 WL 13171764, at *9 (N.D. Ill. Aug. 31, 2012).
4 No. 20-3233
The Boims then turned their focus to enforcing the
judgment—an effort that has spawned new litigation and its
own jurisdictional complexity.
B
The Boims have had little success collecting their $156 mil-
lion judgment. Shortly after the district court entered the
judgment in 2004, the Islamic Association and Holy Land
Foundation claimed they no longer had any assets and an-
nounced they were closing. Less than a year later, a new or-
ganization named American Muslims for Palestine emerged
and then incorporated in 2006. Some of the Islamic Associa-
tion’s former leaders migrated to positions at the new Ameri-
can Muslims for Palestine organization, and the new organi-
zation held its first convention in November 2006 at the same
location and during the same time of year as the Islamic As-
sociation had done in the past. A few years later, American
Muslims for Palestine’s leaders formed a separate organiza-
tion called Americans for Justice in Palestine Educational
Foundation—but the two legal entities now operate as one
and we refer to them jointly as American Muslims for Pales-
tine for the purpose of this opinion.
The Boims—observing these developments and believing
American Muslims for Palestine was a mere continuation of
the Islamic Association under a new name—reacted with a re-
newed attempt in 2017 to collect their judgment. Their en-
forcement efforts progressed along two tracks.
First, the Boims resumed their post-judgment efforts in
case no. 00-cv-2905—the original proceeding in which they re-
ceived the $156 million judgment in the first instance. On May
12, 2017, the Boims filed several motions, including one under
No. 20-3233 5
Federal Rule of Civil Procedure 25(c) to join the new organi-
zation, American Muslims for Palestine (and its affiliate
Americans for Justice in Palestine Educational Foundation),
and three individuals as judgment debtors responsible for sat-
isfying the $156 million judgment.
Second, on that same day, the Boims filed a new lawsuit
in the Northern District of Illinois against American Muslims
for Palestine (and its affiliate) and the same three individuals.
It is this action—case no. 17-cv-3591—that is the focus of this
appeal. The Boims aimed to prove that American Muslims for
Palestine is merely a new name for the same terrorism
funding enterprise that previously operated under the guise
of the Islamic Association, its alternative name American
Muslim Society, and Holy Land Foundation. As a result, the
Boims contended, the new entity—American Muslims for
Palestine—was liable under the Anti-Terrorism Act for the full
amount of the prior $156 million judgment. Likewise, the
Boims’ new complaint alleged that three individuals were
alter egos of the original defendant organizations and these
individuals, too, participated in the terrorism-funding
conduct leading to David’s death.
Two weeks after resuming the litigation in the original
proceeding and filing the new lawsuit, the Boims moved to
consolidate the two cases before the same district judge. Be-
fore any consolidation occurred, however, the district judge
presiding over the new lawsuit granted the defendants’ mo-
tion to dismiss the complaint under Rule 12(b)(1) for lack of
subject matter jurisdiction. But a few months later, the same
district court reconsidered its decision, vacated the dismissal,
and permitted the Boims to conduct limited jurisdictional
6 No. 20-3233
discovery on the existence of an alter ego relationship be-
tween the new entity and the defunct ones.
After a year of jurisdictional discovery, the Boims filed an
amended complaint, narrowing the defendants to two: Amer-
ican Muslims for Palestine (with its affiliate Americans for
Justice in Palestine Educational Foundation) and an individ-
ual named Rafeeq Jaber. This amended complaint alleged at
length how the Islamic Association’s leaders, including Jaber,
closed the Islamic Association in name only to avoid paying
the $156 million owed, plotted a transition to a purportedly
new entity, continued the old Islamic Association’s activities
under the new name American Muslims for Palestine, and at-
tempted to disguise any connection between the defunct and
new organizations.
In their amended complaint, the Boims asserted that the
new American Muslims for Palestine is one and the same or-
ganization as the purportedly defunct Islamic Association
and Holy Land Foundation, just with a different name—in
other words, it is an alter ego of the original defendant organ-
izations. For that reason, the Boims contended, American
Muslims for Palestine is inherently and necessarily linked to
the underlying wrongdoing connected to David’s death, and
therefore is liable under the Anti-Terrorism Act, 18 U.S.C.
§ 2333(a), and responsible for the unpaid portion of the $156
million judgment. For their part, American Muslims for Pal-
estine and Rafeeq Jaber dispute these allegations and main-
tain they have no relationship with the Islamic Association or
Holy Land.
The Boims’ amended complaint raised two counts against
American Muslims for Palestine—one seeking a declaration
establishing alter ego identity and liability under the Anti-
No. 20-3233 7
Terrorism Act for the unpaid judgment, and the other request-
ing the entry of a money judgment for the remainder of the
$156 million left unsatisfied. The Boims also raised two claims
against Rafeeq Jaber, who was responsible for winding up the
Islamic Association’s affairs: first, that he fraudulently con-
cealed material facts regarding the Islamic Association’s as-
sets, and second, that he was jointly liable for the $156 million
judgment under the doctrine of veil piercing or as an alter ego
of the original defendants.
C
The defendants moved to dismiss the amended complaint
for lack of subject matter jurisdiction under Rule 12(b)(1), and
once more, the district court granted the motion. Over the
Boims’ objection, the district court reasoned that because it
had allowed jurisdictional discovery, the defendants’ motion
to dismiss effectively constituted a challenge to the factual ba-
sis for subject matter jurisdiction. Accordingly, the district
court looked beyond the pleadings to the evidence submitted
by both parties to decide whether it possessed jurisdiction.
See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443–
44 (7th Cir. 2009) (explaining factual challenges to jurisdic-
tion).
Focused on the Boims’ alter ego argument, the district
court applied an ERISA-based test for alter ego liability and
found that, on balance, the facts showed that American Mus-
lims for Palestine and the original defendants were separate
and distinct entities. The district court then determined that
because the facts did not bear out the Boims’ allegations of
alter ego status, it lacked subject matter jurisdiction over the
Boims’ new lawsuit. From there the court declined to exercise
supplemental jurisdiction over the Boims’ state law successor
8 No. 20-3233
liability claim against American Muslims for Palestine and the
state law claims against Rafeeq Jaber. In the end, then, the dis-
trict court dismissed the amended complaint in its entirety for
lack of subject matter jurisdiction.
The Boims now appeal.
II
The district court’s assessment of subject matter jurisdic-
tion reflected legal error.
A
Because federal courts possess limited jurisdiction, and
“[j]urisdiction is power to declare the law,” the first step in
any federal lawsuit is ensuring the district court possesses au-
thority to adjudicate the dispute—in short, that it has jurisdic-
tion over the subject matter. Steel Co. v. Citizens for a Better En-
v't, 523 U.S. 83, 94 (1998) (quoting Ex parte McCardle, 74 U.S.
(7 Wall.) 506, 514 (1868)). Limits on a federal court’s authority
flow from both the Constitution and Congress. See Exxon Mo-
bil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005).
Article III of the Constitution restricts a federal court’s ju-
risdiction to resolving “Cases” and “Controversies.” See U.S.
Const. art. III, § 2; Susan B. Anthony List v. Driehaus, 573 U.S.
149, 157–58 (2014) (explaining the standing aspect of Article
III’s Case or Controversy requirement); DaimlerChrysler Corp.
v. Cuno, 547 U.S. 332, 335 (2006) (reminding that mootness,
ripeness, and the political question doctrine also flow from
the Case or Controversy requirement). Further, district courts
can only exercise power if authorized by Congress, so each
case in federal court must rest upon an independent statutory
basis for federal jurisdiction. See Exxon Mobil, 545 U.S. at 552;
see also Patchak v. Zinke, 138 S. Ct. 897, 906 (2018) (“Congress’
No. 20-3233 9
greater power to create lower federal courts includes its lesser
power to ‘limit the jurisdiction of those Courts.’” (quoting
United States v. Hudson, 11 U.S. (7 Cranch) 32, 33 (1812))).
The latter requirement—the statutory basis for federal
jurisdiction—is the focus of this appeal. Two statutes
authorize a majority of cases in federal court: 28 U.S.C. § 1331,
which grants jurisdiction over cases arising under federal law
(so-called federal question jurisdiction), and 28 U.S.C. § 1332,
which authorizes jurisdiction over cases between diverse
parties involving more than $75,000 in controversy (so-called
diversity jurisdiction). See Home Depot U.S.A., Inc. v. Jackson,
139 S. Ct. 1743, 1746 (2019). A third source of jurisdiction—
supplemental or ancillary jurisdiction—also plays a role.
Once a federal court acquires an independent basis for subject
matter jurisdiction over a case (often pursuant to § 1331 or
§ 1332), the court can entertain certain claims or incidental
proceedings that would not, on their own, suffice for federal
jurisdiction. See Peacock v. Thomas, 516 U.S. 349, 355 (1996)
(“Ancillary jurisdiction may extend to claims having a factual
and logical dependence on ‘the primary lawsuit,’ but that
primary lawsuit must contain an independent basis for
federal jurisdiction.” (citation omitted)).
The Supreme Court has long recognized that a federal
court may exercise ancillary jurisdiction for “two separate,
though sometimes related, purposes: (1) to permit disposition
by a single court of claims that are, in varying respects and
degrees, factually interdependent; and (2) to enable a court to
function successfully, that is, to manage its proceedings,
vindicate its authority, and effectuate its decrees.” Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 379–80 (1994)
(citations omitted); see also Root v. Woolworth, 150 U.S. 401,
10 No. 20-3233
413 (1893). Congress codified much of the first category in the
supplemental jurisdiction statute, 28 U.S.C. § 1367, while the
latter category—at times called “ancillary enforcement
jurisdiction”—remains grounded in federal common law. See
Peacock, 516 U.S. at 354 n.5, 356; see also Butt v. United
Brotherhood of Carpenters & Joiners of Am., 999 F.3d 882, 886–87,
886 n.3 (3d Cir. 2021) (reviewing the history of pendent,
ancillary, and ancillary enforcement jurisdiction); Charles
Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§§ 3523, 3523.2 (3d ed. 2021) (explaining the development of
supplemental jurisdiction and that ancillary enforcement
jurisdiction is still governed by common law).
B
A federal court must assure itself of subject matter juris-
diction in every case, even those that function to enforce a
preexisting judgment. See, e.g., Peacock, 516 U.S. 349. The ju-
risdictional analysis, however, plays out differently depend-
ing on the posture of the enforcement proceeding, as the fol-
lowing examples illustrate.
The most straightforward path for enforcing a judgment is
a continuation of legal proceedings in the same court (and of-
ten before the same judge) that entered the judgment. Federal
Rule of Civil Procedure 69 provides a mechanism for a court
to enforce its own judgments, drawing upon state law for the
procedures to govern such proceedings. See Fed. R. Civ. P.
69(a). As the Supreme Court observed in Peacock, these sup-
plementary enforcement proceedings generally fall within a
federal court’s ancillary jurisdiction as part of its “inherent
power to enforce its judgments.” 516 U.S. at 356. The Boims
themselves followed this path in 2017 when they filed mo-
tions in the original underlying proceeding (case no. 00-cv-
No. 20-3233 11
2905) to revive the $156 million judgment and to add Ameri-
can Muslims for Palestine as a judgment debtor. But the dis-
trict court deferred any action on these motions, and those
proceedings have since stalled.
The jurisdictional analysis takes on added complexity
when the enforcement effort seeks to proceed in a new law-
suit. In some situations, for example, a prevailing litigant at-
tempts to recover a money judgment from a new defendant,
different from the one named in the judgment, by filing a sep-
arate lawsuit and arguing the new defendant is vicariously
responsible for the preexisting judgment.
The Supreme Court addressed this scenario in Peacock and,
on the theory of vicarious liability pursued there, held that the
action did not belong in federal court. See 516 U.S. at 351. The
plaintiff, Jack Thomas, secured a money judgment under
ERISA against his former employer and later filed a new law-
suit to hold a corporate officer, D. Grant Peacock, vicariously
liable for that judgment through the doctrine of veil piercing.
See id. at 351–52.
At the outset, the Supreme Court determined Thomas’s
new lawsuit to impose vicarious liability did not rest on any
federal cause of action supplied by Congress in ERISA. See id.at 353–54. The Court observed that no part of ERISA recog-
nizes an action to impose vicarious liability on a third party
through veil piercing, and although ERISA does provide a
cause of action in 28 U.S.C. § 1132(a)(3) for direct liability—to
redress violations of ERISA—Thomas’s complaint did not
raise any allegation that Peacock himself violated ERISA. See
id. “Because Thomas alleged no ‘underlying’ violation of any
provision of ERISA” in his complaint, the Court explained,
§ 1331 could not support federal jurisdiction. Id. at 354.
12 No. 20-3233
As for ancillary jurisdiction, the Court recognized that it
had “approved the exercise of ancillary jurisdiction over a
broad range of supplementary proceedings involving third
parties to assist in the protection and enforcement of federal
judgments—including attachment, mandamus, garnishment,
and the prejudgment avoidance of fraudulent conveyances.”
Id. at 356. But the Court clarified that ancillary enforcement
jurisdiction did not extend over “a subsequent lawsuit to im-
pose an obligation to pay an existing federal judgment on a
person not already liable for that judgment.” Id. at 357. The
district court therefore lacked jurisdiction over Thomas’s new
suit against Peacock as a new defendant. See id. at 360; see also
E. Cent. Ill. Pipe Trades Health & Welfare Fund v. Prather Plumb-
ing & Heating, Inc., 3 F.4th 954, 960–63 (7th Cir. 2021) (apply-
ing Peacock and concluding a district court lacked jurisdiction
over a new lawsuit to impose an existing ERISA judgment
against a new company under a theory of successor liability—
another form of vicarious liability).
Not all efforts to enforce a preexisting judgment fall within
Peacock’s ambit, though. Consider a third scenario in which a
prevailing litigant attempts to recover a money judgment by
suing an entity purported to be one and the same as—the alter
ego of—the original judgment debtor. See Howard Johnson Co.
v. Detroit Loc. Joint Exec. Bd., Hotel & Rest. Emps. & Bartenders
Int'l Union, 417 U.S. 249, 259 n.5 (1974) (explaining that alter
ego allegations assert that one entity “is in reality the same
employer and is subject to all the legal and contractual obli-
gations of” the other entity).
If Company A and Company B, though nominally two en-
terprises, are effectively a singular organization operating un-
der two names, then A is directly responsible for B’s
No. 20-3233 13
obligations and wrongdoings because they are one and the
same organization. See id.; Bd. of Trustees, Sheet Metal Workers'
Nat’l Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031, 1038 (7th
Cir. 2000). But the mere fact that two entities are alter egos
does not give rise to liability on its own—the underlying lia-
bility must arise from some source of substantive law, state or
federal. See, e.g., McCleskey v. CWG Plastering, LLC, 897 F.3d
899, 901 (7th Cir. 2018) (seeking to hold one company respon-
sible for collective bargaining obligations as an alter ego of a
defunct company through an ERISA cause of action). Here,
the Boims seek in their amended complaint to hold American
Muslims for Palestine liable for the $156 million judgment re-
ceived in the original private action brought against the Is-
lamic Association and Holy Land Foundation pursuant to
§ 2333(a) of the Anti-Terrorism Act.
We encountered a similar situation in Central States,
Southeast and Southwest Areas Pension Fund v. Central Transport,
Inc., where a fund obtained an ERISA judgment and then
brought a new lawsuit against two entities, Central Transport
and Central Cartage, alleged to be alter egos of the original
judgment debtors. See 85 F.3d 1282, 1284 (7th Cir. 1996).
Because the complaint alleged that Central Transport and
Central Cartage exercised common control with the original
defendants—and thereby “played a part in the initial ERISA
violation”—we determined that the funds’ second lawsuit
brought a “specific claim for relief under ERISA.” Id. at 1286;
see also Ellis v. All Steel Const., Inc., 389 F.3d 1031, 1035 (10th
Cir. 2004) (explaining that “the distinctive feature of direct
liability underpinning Central States’ holding [is] that it turns
on the alter ego’s direct participation in the underlying
violation”). As a result, we concluded the funds’ claim—
rooted in an alter ego theory of liability—arose under federal
14 No. 20-3233
law, meaning the district court possessed subject matter
jurisdiction pursuant to § 1331. See Cent. States, 85 F.3d at1286–87.
We adhered to analogous reasoning in Elite Erectors, where
we determined that a complaint—by alleging that two
defendants were alter egos of a third ERISA-covered
employer—asserted they were all “the same entity” and
therefore sought to hold the defendants “directly liable under
federal law” for an ERISA violation. See 212 F.3d at 1037–38.
For that reason, we concluded the plaintiffs invoked a federal
cause of action under ERISA against the alter egos, satisfying
§ 1331 jurisdiction. See id. at 1038.
The Boims’ lawsuit, then, is not our first encounter with
these questions of jurisdiction. The Supreme Court’s teach-
ings and our own case law supply and define the framework
necessary to review the district court’s conclusion that it
lacked subject matter jurisdiction over the Boims’ new lawsuit
and amended complaint. We know from Peacock that a federal
court, after issuing a judgment, possesses ancillary jurisdic-
tion over subsequent proceedings to enforce its own decrees.
Peacock also provides the important reminder that each
standalone case must have an independent basis for subject
matter jurisdiction, because ancillary jurisdiction does not ex-
tend over new lawsuits to enforce an existing judgment
against a party not already bound to that judgment. Finally,
Central States and Elite Erectors tell us that a new lawsuit
against an alleged alter ego can satisfy § 1331 when the new
action arises under federal law—when it proceeds pursuant
to a federal cause of action to hold the alter ego directly liable.
No. 20-3233 15
C
Guided by these precedents, the proper jurisdictional
analysis of the Boims’ amended complaint comes into clearer
focus.
The Boims seek to recover their existing $156 million judg-
ment from entities they contend are one and the same as the
original defendants. The Boims’ current action, filed under a
new case number and assigned to a different district judge,
alleges that American Muslims for Palestine is an alter ego of
the original defendants, Islamic Association for Palestine and
Holy Land Foundation. They invoke the civil liability provi-
sion of the Anti-Terrorism Act, § 2333(a), which authorizes a
private action against entities that provided material support
to terrorism knowing the resources would be used to further
the killing or attempted killing of an American citizen abroad.
See Boim III, 549 F.3d at 691 (describing the elements for hold-
ing a terrorism donor liable under § 2333(a)). The Boims
maintain that because these nominally distinct entities are in
reality the same terrorism-funding organization, American
Muslims for Palestine is liable under § 2333(a) for the unpaid
judgment that resulted from Hamas’s murder of their son Da-
vid in 1996.
The Boims have satisfied the prerequisites for federal
jurisdiction under Article III—they have standing to sue,
there is a live dispute about whether American Muslims for
Palestine is liable as an alter ego of the former entities, the
issue is ripe for resolution, and the action presents a case
arising under the laws of the United States—in particular, the
Anti-Terrorism Act. See U.S. Const. art. III, § 2; Susan B.
Anthony List, 573 U.S. at 157–58; Verlinden B.V. v. Cent. Bank of
16 No. 20-3233
Nigeria, 461 U.S. 480, 492–95 (1983) (explaining the broad
meaning of “arising under” federal law as used in Article III).
The inquiry into the statutory basis for subject matter ju-
risdiction is more complex. The Boims purport to invoke fed-
eral question jurisdiction under 28 U.S.C. § 1331, and our
analysis begins—and ends—with that contention.
Section 1331 confers federal jurisdiction over “all civil ac-
tions arising under the Constitution, laws, or treaties of the
United States.” 28 U.S.C. § 1331. The Supreme Court has long
instructed that a case arises under federal law “when federal
law creates the cause of action asserted.” Merrill Lynch, Pierce,
Fenner & Smith Inc. v. Manning, 136 S. Ct. 1562, 1569 (2016);
Am. Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260
(1916). At this threshold stage of litigation, it matters not
whether the Boims’ amended complaint states a meritorious
claim on a federal cause of action. See Steel Co., 523 U.S. at 89(“It is firmly established in our cases that the absence of a
valid (as opposed to arguable) cause of action does not impli-
cate subject-matter jurisdiction, i.e., the courts’ statutory or
constitutional power to adjudicate the case.”). All that matters
for § 1331 jurisdiction is that the amended complaint “pleads
a colorable claim ‘arising under’ the Constitution or laws of
the United States.” Arbaugh v. Y&H Corp., 546 U.S. 500, 513
(2006); see also Bell v. Hood, 327 U.S. 678, 681 (1946) (instruct-
ing that courts, in assessing jurisdiction, “must look to the
way the complaint is drawn to see if it is drawn so as to claim
a right to recover under the Constitution and laws of the
United States”).
The Boims’ amended pleading satisfies these require-
ments. The complaint alleges that “AMP/AJP is IAP/AMS and
HLF, but just has a different name.” Am. Compl. ¶ 162. Right
No. 20-3233 17
to it, the Boims claim that American Muslims for Palestine,
whom the parties refer to as AMP/AJP, is the alter ego of the
original judgment debtors—Islamic Association for Palestine
and Holy Land Foundation. If that assertion proves true on
the merits, the necessary consequence is that American Mus-
lims for Palestine is the same organization that provided ma-
terial support to Hamas in connection with David Boim’s
death—meaning it is directly liable under the Anti-Terrorism
Act. See Elite Erectors, 212 F.3d at 1038; Cent. States, 85 F.3d at
1286. The Boims make this point explicit in their amended
complaint by contending that, “[a]s alter egos and/or succes-
sors of Boim Defendants IAP/AMS and HLF, AMP/AJP and
Jaber are effectively the same entity or person as these Boim
Defendants and are liable to Plaintiffs under 18 U.S.C.
§ 2333(a) for the unpaid portion of the Boim judgment.” Am.
Compl. ¶ 166.
We read the pleading to mean what it says. The Boims’
amended complaint claims a right to recover from American
Muslims of Palestine under the Anti-Terrorism Act, § 2333(a).
And by resting their claim on a federal statute that itself sup-
plies a cause of action, the Boims have brought a case “arising
under” federal law within the meaning of 28 U.S.C. § 1331.
See Merrill Lynch, 136 S. Ct. at 1569.
Recognize how the Boims’ action differs from the situation
in Peacock, where the plaintiff sought to hold a corporate of-
ficer vicariously liable by piercing the corporate veil under a
statute that did not contain a cause of action for such vicarious
liability. See 516 U.S. at 353–54. The Anti-Terrorism Act like-
wise does not appear to provide a cause of action for impos-
ing vicarious liability. See Boim III, 549 F.3d at 691 (explaining
18 No. 20-3233
that a donor to terrorism must have provided material sup-
port to be liable under § 2333(a)).
But the Boims do not contend that this new defendant is
only derivatively or vicariously liable for a predecessor’s past
violations, as was the case in Peacock. See also Prather Plumbing
& Heating, 3 F.4th at 962–63; Ellis, 389 F.3d at 1034–36. To the
contrary, the Boims allege that American Muslims for Pales-
tine is just a new name for the same preexisting organization
that provided material support to Hamas in furtherance of
David Boim’s death. Indeed, the amended complaint is re-
plete with factual allegations that show, in the Boims’ view,
that American Muslims for Palestine is a disguised continu-
ance of the Islamic Association and Holy Land Foundation,
and in that way, American Muslims for Palestine played a role
in the original wrongdoing that led to their son’s murder at
the hands of Hamas. See Cent. States, 85 F.3d at 1286 (conclud-
ing a complaint raised a specific claim for relief under federal
law where it contained alter ego allegations linking the de-
fendant to the underlying ERISA violation). Put another way,
the Boims allege that American Muslims for Palestine is di-
rectly liable for providing material support leading to David’s
death—and the statutory cause of action in the Anti-Terrorism
Act, § 2333(a), permits a suit to redress that harm.
We acknowledge that two features of the Boims’ amended
complaint complicate our analysis. First, the specific num-
bered counts against American Muslims for Palestine seek a
declaratory judgment (Count I) and entry of a monetary judg-
ment (Count III) without expressly citing the cause of action
in § 2333(a). Second, the Boims are explicit about their goals,
asserting that “this declaratory judgment action seeks to
No. 20-3233 19
enforce the Boim Judgment against AMP and AJP as alter egos
and successors of the Boim Defendants.” Am. Compl. ¶ 7.
But the observation that the precise counts do not ex-
pressly invoke § 2333(a) does not establish the absence of a
claim arising under federal law. For one, each count explicitly
incorporates the detailed factual allegations that precede its
place in the amended complaint, including those claiming
that American Muslims for Palestine is liable under § 2333(a)
because it is one and the same entity as the Islamic Associa-
tion and Holy Land Foundation. For another, “the great
weight of authority makes it clear that a failure to name the
particular statute, treaty, or provision of the Constitution un-
der which the action arises is not fatal if the remainder of the
complaint shows that a federal question actually is involved
or relied upon by the pleader.” Wright & Miller, Federal Prac-
tice and Procedure § 1209; see, e.g., Johnson v. City of Shelby, 574
U.S. 10, 11 (2014) (summarily reversing a decision that re-
quired a complaint to expressly invoke 42 U.S.C. § 1983 and
explaining that federal pleading rules “do not countenance
dismissal of a complaint for imperfect statement of the legal
theory supporting the claim asserted”); AmSouth Bank v. Dale,
386 F.3d 763, 779 (6th Cir. 2004) (collecting cases from various
circuits following the same approach).
What is more, a viable pleading need only include a “short
and plain statement of the claim showing that the pleader is
entitled to relief,” and district courts are to construe pleadings
in the plaintiff’s favor, affording the complaint a fair and rea-
sonable construction “so as to do justice.” Fed. R. Civ. P. 8(a),
(e); see also Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir.
2010) (“One objective of Rule 8 is to decide cases fairly on their
merits, not to debate finer points of pleading where
20 No. 20-3233
opponents have fair notice of the claim or defense.”). Given
the comprehensive nature of the Boims’ amended complaint,
it does not require a fine-toothed comb to see that, in sub-
stance, the complaint advances a claim to impose liability on
American Muslims for Palestine under § 2333(a) through the
mechanism of a declaratory judgment action.
The opening pages of their amended complaint make ex-
pressly clear that the Boims “seek to impose liability on AMP,
AJP and Rafeeq Jaber arising from the civil liability provisions
of the [Anti-Terrorism Act]” by bringing an action pursuant
to § 2333(a). Am. Compl. ¶ 11. The subsequent pages allege in
depth the facts and events which, the Boims maintain, entitle
them to damages under § 2333(a) from the new organization
and Jaber as alter egos of the Islamic Association. A fair read-
ing of the amended complaint, then, reveals that the Boims
aim to hold American Muslims for Palestine liable under
§ 2333(a) by connecting the organization, as an alter ego of the
Islamic Association, to the wrongdoing that led to the $156
million judgment. The district court seemed to read the com-
plaint this same way, describing the Boims’ action as one
seeking relief under the Anti-Terrorism Act.
Remember, too, that the plaintiffs are the master of their
complaint. See Bell, 327 U.S. at 681 (“[T]he party who brings a
suit is master to decide what law he will rely upon, and …
does determine whether he will bring a ‘suit arising under’
the … (Constitution or laws) of the United States by his dec-
laration or bill.” (quoting The Fair v. Kohler Die & Specialty Co.,
228 U.S. 22, 25 (1913))). The Boims have elected to pursue a
federal claim to hold the new organization, American Mus-
lims for Palestine, liable under the Anti-Terrorism Act as an
alter ego of the Islamic Association and Holy Land
No. 20-3233 21
Foundation and therefore responsible in connection with Da-
vid’s death. Whether the Boims can ultimately prove that
claim is of no consequence at this stage. All that matters is a
recognition that here, unlike the claim for veil piercing in Pea-
cock, the Boims’ claim rests on a federal cause of action in
§ 2333(a) and therefore arises under federal law within the
meaning of 28 U.S.C. § 1331. Cf. Peacock, 516 U.S. at 353–54.
That is enough to confer federal subject matter jurisdiction on
the district court.
D
The district court reached a contrary conclusion by con-
flating a merits inquiry—whether American Muslims for Pal-
estine is, in fact, the same entity as the Islamic Association or
Holy Land Foundation—with the question of federal jurisdic-
tion.
The Supreme Court has cautioned against deciding merits
questions when evaluating challenges to jurisdiction. See, e.g.,
Steel Co., 523 U.S. at 89; Bell, 327 U.S. at 681–82. Jurisdiction,
the Court has emphasized, “is not defeated … by the possibil-
ity that the averments might fail to state a cause of action on
which petitioners could actually recover.” Bell, 327 U.S. at 682;
see also Craftwood II, Inc. v. Generac Power Sys., Inc., 920 F.3d
479, 481 (7th Cir. 2019). To the contrary, “[w]hether the com-
plaint states a cause of action on which relief could be granted
is a question of law and just as issues of fact it must be decided
after and not before the court has assumed jurisdiction over
the controversy.” Bell, 327 U.S. at 682 (emphasis added); see
also Steel Co., 523 U.S. at 89 (reinforcing this principle);
Thornton v. M7 Aerospace LP, 796 F.3d 757, 765 (7th Cir. 2015)
(applying the Bell rule). This principle explains why we in-
structed in Malak v. Associated Physicians, Inc. that “where a
22 No. 20-3233
challenge to the court’s jurisdiction is also a challenge to the
existence of a federal cause of action,” the district court should
handle the objection “as a direct attack on the merits of plain-
tiff’s case,” applying the protections inherent to merits chal-
lenges under Rule 12(b)(6) or Rule 56. 784 F.2d 277, 279–80
(7th Cir. 1986).
The defendants here moved to dismiss the Boims’
amended complaint by arguing that the evidence assembled
during jurisdictional discovery did not support a finding that
American Muslims for Palestine is an alter ego of the original
judgment debtors. But this contention is an attack on the mer-
its of the Boims’ claim, not a challenge to the factual basis for
the district court’s constitutional and statutory authority to
adjudicate the dispute. That is because the district court’s ju-
risdiction did not hinge on a finding that American Muslims
for Palestine is, in fact, an alter ego of the original defendants.
The district court saw things differently, construing the
defendants’ motion as a factual attack on subject matter juris-
diction. This mistake was not a mere trivial error in labeling
the type of challenge. It had significant and detrimental con-
sequences for the viability of the Boims’ suit.
To begin, the district court permitted only limited jurisdic-
tional discovery on the existence of an alter ego relationship.
We cannot say the factual record was fully developed on the
question.
Even more, the Boims did not receive the protections af-
forded to nonmoving parties when courts assess merits chal-
lenges via Rule 12(b)(6) or Rule 56—protections that do not
apply in factual challenges to jurisdiction under Rule 12(b)(1).
See Apex Digital, 572 F.3d at 444. Under Rule 12(b)(6), courts
No. 20-3233 23
must assume the truth of the allegations in the complaint, see
Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008), and
on a motion for summary judgment under Rule 56, a court
similarly must view the evidence and draw all inferences “in
the light most favorable to the opposing party,” Tolan v. Cot-
ton, 572 U.S. 650, 657 (2014) (quoting Adickes v. S. H. Kress &
Co., 398 U.S. 144, 157 (1970)). By contrast, when considering a
factual challenge to jurisdiction under Rule 12(b)(1), “no pre-
sumptive truthfulness attaches to plaintiff’s allegations.” Apex
Digital, 572 F.3d at 444 (quoting Mortensen v. First Fed. Sav. &
Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).
The district court, analyzing what it deemed a factual at-
tack on jurisdiction, assessed the merits of the Boims’ action
but failed to presume the truth of the allegations or take the
facts in the light most favorable to the Boims. And our review
shows that the district court’s error contributed to, if not ac-
counted for, the unfavorable ruling against the Boims.
One example illustrates the point in stark terms. The
Boims alleged and proffered evidence that, by late 2005, a
group of individuals began using an online Yahoo! bulletin
board titled “AMP_Transition” to discuss the formation of the
new organization, making comments such as “we really need
to distance ourselves from any well known IAP figures …
[s]ince this is the transition period.” Am. Compl. ¶¶ 67, 69.
The Boims highlighted this particular post to show that the
new organization’s founders intentionally and deceptively
concealed that American Muslims for Palestine, the new en-
tity, was a continuation of the old Islamic Association. In the
district court’s view, however, this evidence showed that the
new entity’s founders made legitimate efforts to distinguish
themselves from the Islamic Association, which the court
24 No. 20-3233
considered to be proof that American Muslims for Palestine is
not an alter ego of the Islamic Association.
If the district court had applied the requisite presumptions
under Rule 12(b)(6) or Rule 56, it would have been compelled
to view the facts and make inferences from this evidence in
the Boims’ favor. Here, that would mean viewing the bulletin
board posting as evidence showing fraudulent intent to avoid
liability—one factor supporting alter ego liability, not
negating it. See Cent. States, 85 F.3d at 1288 (explaining that,
at least in the ERISA context, “[e]ssential to the application of
the alter-ego doctrine is a finding of a disguised continuance
of a former business entity or an attempt to avoid the
obligations of a collective bargaining agreement, such as a
sham transfer of assets”); see also McCleskey, 897 F.3d at 903
(same).
Dismissals on the pleadings “should be granted sparingly
and with caution to make certain that the plaintiff is not im-
properly denied a right to have his claim adjudicated on the
merits.” Wright & Miller, Federal Practice and Procedure § 1349.
The liberal pleading standard in Rule 8 and the presumptions
accorded to nonmovants on dispositive motions should have
played a role in the district court’s consideration of the merits
of the Boims’ alter ego allegations. See Erickson v. Pardus, 551
U.S. 89, 93–94 (2007).
Our point with all of this is to say that the district court
committed legal error when terminating the Boims’ new case
on jurisdictional grounds.
No. 20-3233 25
III
A
Because we conclude the district court possessed federal
jurisdiction under § 1331 and erred in dismissing the Boims’
amended complaint, we remand for further proceedings. The
Boims are entitled to have their claim—that American
Muslims for Palestine, as an alter ego of the Islamic
Association and Holy Land Foundation, is liable under
§ 2333(a)—proceed to adjudication on the merits, and that
warrants a few words on the legal standard.
In analyzing the Boims’ alter ego allegations, the district
court applied a test from the ERISA context for establishing
alter ego liability. See McCleskey, 897 F.3d at 903. In so doing,
the district court considered factors traditionally used to de-
termine if an employer has flouted its obligations under col-
lective bargaining agreements through a sham change in its
corporate form—factors like whether the companies have
overlapping management, ownership, assets, business pur-
pose, equipment, and customers. See id.
But the alter ego doctrine is not rigid and must account for
the context in which the doctrine is being applied—here, to
terrorism financing organizations. Cf. Nat'l Council of Re-
sistance of Iran v. Dep't of State, 373 F.3d 152, 157 (D.C. Cir.
2004) (flexibly applying the alias concept in the terrorism con-
text to an entity designated as the alias of a foreign terrorist
organization). Not all of the alter ego factors relevant in the
employee benefit plan context will be probative. It is difficult,
for instance, to see how substantial similarity (or lack thereof)
in customers, equipment, or ownership would have any
meaningful bearing on the alter ego inquiry in the context of
26 No. 20-3233
terrorism financing nonprofit organizations, which do not
have customers, equipment, or owners in the traditional cor-
porate sense. Factors like overlap in leadership, same organi-
zational purpose, similarity of operations, and unlawful mo-
tive or intent to escape liability would seem to take on added
weight, as could other factors that have not expressly played
a role in assessing alter ego liability in the labor law context.
The district court, aided by the parties’ briefing, is best
equipped to discern the apt analysis for alter ego status in this
context.
The Boims’ amended complaint alleged in the alternative
that American Muslims for Palestine was liable under the
doctrine of successor liability and also included two claims
against Rafeeq Jaber—one asserting he is liable for the $156
million judgment either under the doctrine of veil piercing or
as an alter ego of the original defendants, and the other
presenting a state law claim of fraudulent concealment. The
district court declined to exercise supplemental jurisdiction
over these claims. Our conclusion—that the district court
indeed possessed an independent basis for subject matter
jurisdiction—necessitates a fresh look by the district court at
these additional claims as well.
B
The action we reinstate today is only one of two tracks the
Boims pursued to hold American Muslims for Palestine to ac-
count as an alter ego, the other being the resumption of efforts
in the original proceeding that resulted in the $156 million
judgment—case no. 00-cv-2905. As long as federal jurisdiction
lies in each proceeding, both may properly remain in federal
court.
No. 20-3233 27
We have concluded the district court possesses jurisdic-
tion pursuant to 28 U.S.C. § 1331 over the Boims’ new lawsuit
in case no. 17-cv-3591 because the amended complaint in-
vokes a federal cause of action under the Anti-Terrorism Act
and thus arises under federal law. Regarding the judgment
enforcement proceedings in the original action, the Supreme
Court in Peacock expressly instructed that it is a proper use of
a court’s “ancillary enforcement jurisdiction” to bring subse-
quent proceedings in the same case, even against third par-
ties, “to assist in the protection and enforcement of federal
judgments.” 516 U.S. at 356.
On remand, the district court may use its discretion to per-
mit the Boims to file an amended pleading to sharpen their
allegations in light of our decision. The Boims are likewise
free, if they choose, to resume proceedings before the original
trial court and move to consolidate the two proceedings be-
fore the same district court judge.
For these reasons, we REVERSE and REMAND.