Kaplan v. Central Bank of the Islamic Republic of Iran

UNITED sTATEs DISTRICT CoURT F I L E D
FoR THE DIsTRICT oF CoLUMBIA
SEP 30 ZGtS
Cierk, U.S. Dismct & Bankruptcy
CHAIM KAPLAN, et al.,
Courts for the District of Columbia
Plaintiffs,
v. Case No. 09-00646 (RCL)
HEZBOLLAH, et al.,
Defendants.
CHAIM KAPLAN, et al.,
Plaintiffs,
Case No. 10-00483 (RCL)
V.
THE CENTRAL BANK OF THE
ISLAMIC REPUBLIC OF IRAN, et al.,
Defendants.
VVVVVVVVVVVVVVVVVVVVVV
MEMORANDUM OPINION
I. BACKGROUND
This action arises out of the July and August 2006 rocket attacks launched by Hezbollah
into northern Israel. Plaintiffs, victims of these attacks, include: Brian, Karene, Mayan, Noa,
Netiya and Ariel Erdstein; Chaim, Rivka, Mushka, Reuven, Menachem, Chana and Efraim
Kaplan; Theodore and Moreen Greenberg; Jared and Danielle Sauter; Myra Mandel; Michael
Fuchs; Dvora Kaszemacher and Chaya Alkareif; Chayim and Nechama Kumer; Laurie and
Margalit Rappeport; and Avishai Reuvane and Elisheva Aron. Together, they bring this suit
against The Islamic Republic of lran (“Iran”) and The Democratic People’s Republic of Korea
(“North Korea”) under the state-sponsored terrorism exception to the Foreign Sovereign
Immunities Act, 28 U.S.C. §§ 1330, 1602 et seq. (“FSIA”). Codifled at 28 U.S.C. § 1605A, the
exception provides “afederal right of action against foreign states” that sponsor terrorist acts.
Hal`m v. lslamic Republic oflrcm, 784 F. Supp. 2d l, 4 (D.D.C. 2011).
II. PROCEDURAL HISTORY
Based on the events of July and August, 2006, Plaintiffs filed a complaint on April 8,
2009 against Hezbollah and North Korea under the Antiterrorism Act, 18 U.S.C. § 2333(a) and
the Foreign Sovereign Immunities Act, 28 U.S.C. § 1605A(c) (Case No. l:09-cv-00646) (ECF
No.l). On l\/Iarch 23, 2010, Plaintiffs filed a second complaint, this time against the Central
Bank of the lslamic Republic of Iran; Bank Saderat, Iran (“BSI”); Bank Saderat, PLC
(“BSPLC”), the Central Bank of Iran (“CBI”), 40 “John Does” as Well as Iran under the same
statutory schemes, alleging these entities and individuals provided “extensive material support
and resources to Hezbollah, that caused, enabled and facilitated” the Hezbollah rocket attacks.
(Case No. 1:10-cv-00483) (ECF No. 3)
The Court dismissed the claims against BSI and BSPLC on November 5, 2010, treating
the banks’ unopposed motion to dismiss as conceded (lO-cv-483) (ECF No. 16). On August 20,
2013, the Court dismissed the statutory claims against Hezbollah (09-cv-646) (ECF No. 50) as
Well as the claims against the 40 John Does (10-cv-483) (ECF 42). On August 20, 2015,
plaintiffs voluntarily dismissed their common-law claims against Hezbollah (09-cv-646) (ECF
No. 63). Remaining are plaintiffs’ FSIA claims against North Korea (09-cv-646) and lran (10-
cv-483).
III. LIABILITY
In an order and accompanying memorandum opinion dated July 23, 2014, (09-cv-646)
(ECF No. 57), the Court concluded that it had subject matter jurisdiction over this action and that
it could properly exercise personal jurisdiction over the defendants The Court reasoned,
“[b]ased on the allegations in Plaintiffs’ Amended Complaint and the evidence presented by
plaintiffs,” that “there can be no doubt that North Korea and Iran provided material support to
Hezbollah,” and that both nations were subject to suit under 28 U.S.C. § 1605A(c). Ia'. at 4. In
accordance with its liability determination and pursuant to its authority under F ederal Rule of
Civil Procedure 53, the Court appointed Alan Balaran as Special Master for the purpose of taking
evidence and filing reports and recommendations regarding the amount of individual damages to
be awarded each plaintiff Order Appointing Special Master, at 2 (09-cv-646) (ECF 58).
IV. STANDING UNDER THE FSIA
The Special Master determined, at the outset, that two of the plaintiffs, Myra Mandel and
Michael Fuchs lacked standing to bring any claims under the FSIA and that plaintiff Danielle
Sauter lacked standing to claim an award for pain and suffering The Court’s review of these
determinations follow.
Myra Mandel
Myra Mandel, a Canadian citizen, owned an art gallery that was shuttered as a result of
the rocket attacks. She asserts both a claim for pain and suffering as well as economic damages.
The Special Master recommended that Ms. Mandel’s claims be dismissed, finding that her
Canadian citizenship placed her outside the ambit of 28 U.S.C. § 1605A(c), as she is not a
United States citizen, a member of the military, a United States employee, or a legal
representative of the aforementioned as required by 28 U.S.C. § 1605A(2)(A)(ii)(1-111). The
Special Master also found that Ms. Mandel’s claims did not derive from “injuries suffered by
victims who meet the statute’s requirements.” Worley v. lslamic Republic of Iran, 75 F. Supp. 3d
311, 327 (D.D.C. 2014) (citing Leibovz`lch v. lslamic Republic oflran, 697 F.3d 561, 572 (7th
Cir. 2012)). And in accordance with the principle that foreign nationals “musl [] base their
claims on injuries suffered by victims who meet the statute’s requirements”, Worley, 75
F. Supp. 3d at 326 (emphasis added), the Special Master recommended that Ms. l\/Iandel’s claims
be dismissed for lack of standing
The Court concurs with the Special Master’s finding that Myra Mandel lacks standing
under the FSIA and ADOPTS his recommendation that Ms. Mandel’s claims be dismissed.
Michael Fuchs
Michael Fuchs, an lsraeli citizen, seeks compensation for injuries sustained as a result of
an exploding shell. The Special Master recommended that Mr. Fuchs’ claims be dismissed on
evidence that Mr. Fuchs neither is a United States citizen, a member of the military, a United
States employee, nor a legal representative of the aforementioned And, as Mr. Fuchs’ claims
are not derivative of those brought by any person meeting the statutory criteria of the FSIA, the
Special Master dismissed Mr. Fuchs’ action for lack of standing
The Court concurs with the Special Master’s finding that Michael Fuchs lacks standing
under 28 U.S.C. § 1605A(c) and ADOPTS the recommendation that Mr. Fuchs’ claims be
dismissed.
Danielle Sauter
Danielle Sauter seeks compensatory damages for pain and suffering and solatium. The
Special Master denied Ms. Sauter’s claim for pain and suffering in light of her lsraeli citizenship
and the fact that, unlike her claim for solatium, her pain and suffering did not arise from the
claims ofa U.S. national See 0wens v. Republic ofSua'an, 826 F. Supp. 2d 128, 149 (D.D.C.
zoii).
The Court ADOPTS the Special Master’s recommendation that Danielle Sauter’s status
as an Israeli citizen precludes her from pursuing an award for pain and suffering under the FSIA.
V. DAMAGES
Damages available under the FSIA include “economic damages, solatium, pain and
suffering, and punitive damages.” 28 U.S.C. § 1605A(c). To demonstrate entitlement to
damages under the FSIA, a claimant “must prove that the consequences of the defendants’
conduct were ‘reasonably certain (i.e., more likely than not) to occur, and must prove the amount
of the damages by a reasonable estimate consistent with this [Circuit’s] application of the
American rule on damages.”’ Salazar v. lslamic Republic of lrcm, 370 F. Supp. 2d 105, l 15-16
(D.D.C. 2005) (quoting Hl`ll v. Republic oflraq, 328 F.3d 680, 681 (D.C. Cir. 2003) (intemal
quotations omitted). See also 0 ’Brz`en v. lslamic Republic of lran, 853 F. Supp. 2d 44, 46 (D.D.C.
2012).
A. Pain and Suffering
ln its review of the Special Master’s recommendations, the Court is guided by prior
decisions awarding damages to victims of terrorism, mindful of the difficulties associated with
“assess[ing] the amount of compensatory damages for the pain and suffering of surviving victims
of terrorist attacks, especially where severe mental anguish is involved.” Valencia v. lslamic
Republl`c oflran, 774 F. Supp. 2d l, 14 (D.D.C. 2010).
Courts consider a “myriad of factors” when assessing damages for surviving victims of
terrorist hostilities. These factors include: “the severity of the pain immediately following the
injury, the length of hospitalization, and the extent of the impairment that will remain with the
victim for the rest of his or her life.” Peterson v. lslamic Republl`c of Iran, 515 F. Supp. 2d 25, 52
n. 26 (D.D.C. 2007) (citing Blais, 459 F. Supp. 2d at 59). Calculating damages begins with the
baseline assumption that “persons suffering injuries in terrorist attacks are entitled to $5 million
in damages.” Davis v. lslamic Republic oflrcm, 882 F. Supp. 2d 7, 12 (D.D.C. 2012) (citing
Peterson, 515 F. Supp. 2d at 54). This lodestar is “not set in stone,” Murphy v. lslamic Republic
of Iran, 740 F. Supp. 2d 51, 74 (D.D.C. 2010), and can deviate upward in the presence of “severe
instances of physical and psychological pain, such as where victims suffered relatively more
numerous and severe injuries, were rendered quadriplegic, [including] partially lost vision and
hearing, or were mistaken for dead,” Valore v. lslamic Republl`c of ]ran, 700 F. Supp. 2d 52, 84
(D.D.C. 2010), or downward in the face of “minor shrapnel injuries or minor injury from small-
arms fire.” Id. These deviations defer to the principle that “strict application of precedent could
lead to conflicting conclusions about an appropriate award.” Brewer v. lslamic Republl`c of Iran,
664 F. Supp. 2d 43, 57 (D.D.C. 2009) (quoting Blal`s v. lslamic Republic oflran, 459 F. Supp. 2d
40, 59 (D.D.C. 2006)).
For victims who “suffer[ed] severe emotional injury without physical injury, this Court
has typically awarded the victim $1.5 million.” Harrison v. Republl`c ofSudan, 882 F. Supp. 2d
23, 49 (D.D.C. 2012) (citing Valore, 700 F. Supp. 2d at 85). Notwithstanding the “presumption”
that emotional trauma is a natural consequence of terrorist activity, Slelhem v. lslamic Republic
of]ran, 201 F. Supp. 2d 78, 89 (D.D.C. 2002), claimants “must prove damages in the same
manner and to the same extent as any other default winner,” Hill, 328 F.3d at 683-84 (internal
quotation marks and citation omitted), which, in turn, requires that they “prove the fact of injury
with reasonable certainty.” Samarl`tan Inns, Inc. v. Dl`sm`ct of Columbia, 114 F.3d 1227, 1235
(D.C. Cir. 1997).
ln keeping with the guidelines set out in Harrison, 582 F. Supp. 2d at 49, the Special
Master recommended that Rivka Kaplan, Brian Erdstein, Nechama Kumer, Laurie Rappeport,
Margalit Rappeport, Theodore Greenberg, Maureen Greenberg, Jared Sauter, Dvora
Kaszemacher, Chaya Kaszemacher Alkareif, Avishai Reuvane, and Elisheva Aron each receive
81.5 million. The Court ADOPTS all of the Special Master’s recommendations regarding these
claimans. Those instances where the Special Master either denied an award or departed from the
established framework are discussed below.
1. Denial of Compensatorv Damages for Pain and Suffering
(a) Mushka, Reuven, Menachem Chana and Ej$”aim Kaplan
The Special Master recommended that no damages for pain and suffering be awarded to
Chaim and Rivka Kaplan’s children - Mushka, Reuven, Menachem, Chana and Efraim. The
Special Master reasoned that the children supplied no testimony describing the trauma they
experienced as a result of the events of July and August 2006 nor did they agree to undergo a
psychological evaluation from which an informed opinion could be rendered. Accordingly, the
Special Master concluded that he was unable to be “reasonably certain” that Mushka, Reuven,
Menachem, Chana and Efraim Kaplan were “severely injured” as a result of the Hezbollah
rocket attacks.
Plaintiffs contest the Special Master’s recommendation that Mushka, Reuven,
Menachem, Chana and Menachem Kaplan receive no compensatory damages for pain and
suffering The Court will address those challenges in Section VI(B)(3), below.
(b) Noa, Netiya and Ariel Erdstein
The Special Master recommended that Noa and Netiya Erdstein receive no award. The
Special Master did not consider Ariel Erdstein because Plaintiffs’ counsel failed to confirm
Ariel’s citizenship by supplying a passport to the Court or the Special Master. The Special
Master’s recommendation was based, in great measure, on Noa’s and Netiya’S failure to supply
any testimony or provide any expert report bolstering their claim for pain and suffering The
Special Master found the testimony of Brian and Karene particularly fatal to their children’s
claims. According to their affidavits, dated May 2012, neither was able to “point to a direct
change in [Noa’s and Netiya’s] behavior” as a result of the attacks “since [the children] were
very little” at the time of the bombing
Plaintiffs seek reconsideration of the Special Master’s decision to deny compensatory
damages for pain and suffering to Noa and Netiya Erdstein. The Court will address those
challenges in Section VI(C), below.
Departures from Award Guidelines
The Special Master recommended a downward departure with respect to Mikimi
Steinberg, distinguishing Ms. Steinberg’s claim for emotional distress from those brought by
other plaintiffs who were professionally diagnosed with recognized psychological ailments such
as: “Chronic dysthymia (moderate),” “Adjustment Disorder with Depressed Mood,” “PTSD,”
“Depression,” and “Adjustment disorder NOS.” Unlike those claimants who were traumatized
out of concern for their personal safety or the safety of their children, Ms. Steinberg’s testimony
reveals that she was distressed over the state of her apartment following the attacks and the
thought of what “might have happened” had she remained home. The Special Master, therefore
recommended that Mikimi Steinberg receive $850,000 in compensatory damages for pain and
suffering
The Special Master also recommended a downward departure for Yair Mor based on Mr.
Mor’s testimony that the primary source of his “mental anguish” was his loss of income. The
Special Master noted that, in the six pages comprising his sworn statement, Mr. Mor failed to
capture the emotional impact the Hezbollah attack had on him and his family except in broad
generalizations which, for most part, referenced his business losses. Unlike other claimants, Mr.
Mor was able to relocate his family to safety in Tel Aviv and was not forced to remain in
shelters, care for and protect young children from repeated rocket barrages much less navigate
strategic routes to purchase groceries. Moreover, Mr. Mor submitted no psychological
evaluation reports supporting his claim for emotional trauma. Based on the foregoing, the
Special Master recommended that Yair l\/Ior receive $850,000 in compensatory damages for pain
and suffering
The Special Master similarly recommended a downward departure for Rabbi Kaplan
from the $5 million baseline established in Peterson, 515 F. Supp. 2d at 54 to 82 million, given
the absence of any medical records supporting what plaintiffs have characterized as a
“permanent hearing loss.” The Special Master’s recommendation as well plaintiffs’ objections
thereto are discussed more fully in Section VI(B)(l), below.
Conversely, the Special Master recommended an enhancement for Karene Erdstein in
light of testimony offered up by Dr. Strous and others that the rocket attacks contributed to her
miscarriage The Special Master therefore recommended that Ms. Erdstein receive $2.5 million
in compensatory damages for pain and suffering
The Special Master also recommended an enhancement for Chayim Kumer. The
evidence reveals that Mr. Kumer was traumatized to the point of being unable to attend his local
synagogue for three years following the attacks due to recurring flashbacks of ongoing rocket
blasts which took place while he was praying And in addition to being professionally diagnosed
with PTSD and an anxiety disorder, medical evidence reveals that Mr. Kumer’s stress manifested
in gallbladder problems requiring three separate hospitalizations Finally, Dr. Strous confirmed
that, as of 2012 when he conducted his evaluation, Mr. Kumer’s psychological problems had not
subsided. Accordingly, the Special Master recommended that Chayim Kumer receive 82 million
in compensatory damages for pain and suffering
The Court ADOPTS the Special Master’s recommendation that Mikimi Steinberg and
Yair Mor each receive $850,000. The Court further ADOPTS the Special Master’s
recommendation that Karene Erdstein receive $2.5 million and that Chayim Kumer receive 82
million.
B. Solatium
Solatium damages are designed “to compensate persons for mental anguish, bereavement
and grief that those with a close personal relationship to a decedent experience as well as the
harm caused by the loss of the decedent’s society and comfort.” Roth v. lslamic Republic of
fran, 78 F. Supp. 3d 379, 402 (D.D.C. 2015) (quoting ()veissl` v. lslamic Republic oflran, 768
F. Supp. 2d 16, 25 (D.D.C. 2011)) (internal quotation marks and alterations omitted). Solatium
awards have “also been applied to cases where the victim survived a terrorist attack.” Oviessi,
768 F. Supp. 2d at 26 n. 10. Unlike economic losses which may easily be calculated, however,
solatium damages do not readily lend themselves to quantification using “models and variables.”
Elahl` v. lslamic Republl`c oflran, 124 F. Supp. 2d 97, 111 (D.D.C. 2000) (quoting Flal‘ow v.
lslamic Republic of Iran, 999 F. Supp. 2d l, 32 (D.D.C. 1998)). Courts, therefore, look for
guidance in “prior decisions.” Acosta v. The lslamic Republic of Iran, 574 F. Supp. 2d 15, 29
(D.D.C. 2008).
The guidelines emerging from prior decisions begin with the “presumption” that family
members in direct lineal relationship “suffer compensable mental anguish[,] . . . and testimony
proving a close emotional relationship will usually be sufficient to sustain an award of solatium
damages.” Kim v. Democratz`c People ’s Republic ofKorea, 87 F. Supp. 3d 286, 290 (D.D.C.
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2015) (quoting 0vel`ssi, 768 F. Supp. 2d at 25). This presumption, in turn, is a direct reaction to
terrorists’ acknowledged aim of causing “the highest degree of emotional distress, literally,
terror.” Stethem v. lslamic Republl`c oflran, 201 F. Supp. 2d 78, 89 (D.D.C. 2002). See also
Greenbaum v. lslamic Republic of]rarl, 451 F. Supp. 2d 90, 104 (D.D.C. 2006) (“Terrorists seek
to cause extreme suffering in order to achieve political ends; accordingly, they perpetrate acts
that are deliberately outrageous.”).
F or relatives of victims physically injured by terrorist attacks, courts have applied a
framework whereby “awards are ‘valued at half of the awards to family members of the
deceased’_$4 million, $2.5 million and 81.25 million to spouses, parents, and siblings,
respectively,” Anderson v. lslamic Republz'c of Iran, 839 F. Supp. 2d 263, 266 (D.D.C. 2012)
(quoting Ovel`ssi, 768 F. Supp. 2d at 26 n. 10 (D.D.C. 2011)), and 81.5 million for children. ]a’. at
266. Cf Unsongo v. Republic ofSua’an, 60 F. Supp. 3d 144, 151 (D.D.C. 2014) (awarding $2.5
million to children of injured victims of terrorism); Peterson, 515 F. Supp. 2d at 51) ($2.5 million
to child of injured victim). Courts similarly have held that relatives of surviving victims
presenting with emotional trauma and no physical injury receive amounts proportionally less
than those with physical injuries, namely, $l million for spouses; $850,000 for parents; $750,000
for children, and $500,000 for siblings. Davl`s, 882. F.Supp.2d at 16.
The prayers for solatium brought by Brian and Karene Erdstein; Chaim and Rivka
Kaplan; Theodore and Moreen Greenberg; Jared and Danielle Sauter; Dvora Kaszemacher and
Chaya Alkareif; Chayim and Nechama Kumer; Laurie and Margalit Rappeport; and Avishai
Reuvane and Elisheva Aron raise issues not normally found in solatium claims. ln the main,
solatium claims are brought by family members of victims who were terrorized overseas. Here,
however, each of the aforementioned plaintiffs was with their respective families during the
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attacks and, as such, each is a victim potentially entitled to recover for his or her own pain and
suffering as well as a claimant with a potentially colorable claim to recover for the emotional
trauma they endured as a result of the “extreme and outrageous conduct” visited on their loved
ones.
In recommending an award of solatium for two members of the same family, the Special
Master was careful to avoid any duplication of damages which potentially might run afoul of the
holding in Wultz v. lslamic Republi`c oflran, 864 F. Supp. 2d 24 (D.D.C. 2012). There, the Court
was asked to resolve the question whether “a family member entitled to a solatium award should
receive an independent award for each family member killed or injured,” id. at 39, and held that
“the better practice” would be “to establish the family member’s baseline at the higher of the
figures.” Ia’. ln keeping with this holding, the Special Master recommended solatium awards for
Brian and Karene Erdstein yet denied an additional solatium award for the trauma endured by
their daughter Mayan. The Special Master was equally careful to ensure that “the solatium
awards of family members not exceed the pain and suffering awards of the surviving [family
members].” O’Brien, 853 F. Supp. 2d at 47~48.
ln deference to these principles and the guidelines articulated in Davis, 882. F.Supp.2d at
16, the Special Master recommended that Chaim Kaplan, Rivka Kaplan, Brian Erdstein, Karene
Erdstein, Nechama Kumer, Theodore Greenberg and Danielle Sauter each receive $1 million in
compensatory damages for solatium.. Adhering further to these guidelines, the Special Master
recommended solatium awards to Laurie Rappeport and Dvora Kaszemacher in the amount of
$850,000, each, and $750,000 to Chaya Kaszemacher Alkareif.
Finally, the Special Master recognized that, notwithstanding the presumption that
emotional trauma is a natural consequence of terrorist activity, “[l]ines must be drawn in the
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award of damages and one such line includes a situation . . . where no evidence is offered to
show injury that an award of solatium damages might compensate.” Roth v. lslamic Republic of
Iran, 78 F. Supp. 3d 379, 406 (D.D.C. 2015) (emphasis in original). On this principle, the Special
Master denied the solatium claim of Mayan Erdstein due to the complete absence of any
testimony demonstrating she suffered any anguish over the hardships endured by her parents.
The Court finds the Special Master’s recommendations in keeping with well-established
guidelines and, accordingly, ADOPTS the Special Master’s recommended awards.
C. Economic Damages
Chaim Kaplan, Theodore and Maureen Greenberg, Jared Sauter, Elisheva Aron, and
Dvora Kaszemacher seek economic damages for financial losses they purportedly sustained as a
result of the 2006 rocket attacks.
Section 1605A(c) contemplates recovery of economic damages See Moraa’z` v. lslamic
Republic of fran, 77 F.Supp.3d, 57, 71 (D.D.C. 2015) (“as a general rule, lost earnings _ past and
future - are compensable damages”). These damages, however, must be proven “by a
reasonable estimate,” Reea' v. lslamic Republic oflran, 845 F. Supp. 2d 204, 213 (D.D.C.2012),
supported by corroborative evidence. See Wyatt v. Syrl`an Arab Republl`c, 908 F. Supp. 2d 216,
230 (D.D.C. 2012) (denying claims for economic damages where “piaintiffs [] failed to introduce
any evidence of what costs specifically were incurred”; sought damages for a “lost business
opportunity” based on a “speculative” conj ecture; and requested reimbursement for “travel
expenses” without “any evidence supporting this claim”).
The Special Master denied the claims of Chaim Kaplan, Theodore and Maureen
Greenberg, Jared Sauter, and Elisheva Aron for economic damages on the grounds that each
request lacked the evidentiary support necessary to ground an award. Conversely, the Special
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Master recommended that Dvora Kaszemacher be awarded damages reflecting the losses she
successfully demonstrated The Court examines these determinations, in Section VI(B)(2),
below.
ln the proceeding before the Special Master, Rabbi Kaplan requested 8230,375.43 in
damages for loss of income between 2006 and 2015 as well as an additional 8639,931 for future
income he anticipates will be forfeited due to his “inability to work.” ln support, plaintiffs
provided the Special Master with three one-page documents written in Hebrew: the first,
purporting to be an income statement for June 2006; the second, a tax-return form for 2007; and
the third, a tax-return form for 2013. No accounting statements or forensic income projections
verifying Rabbi Kaplan’s prayer for relief were supplied. The Special Master’s recommendation
and plaintiffs’ objections thereto are discussed more fully in Section VI(B)(2), below.
Theodore Greenberg seeks damages for a “business loss of about $2,500 - $3,000” during
the rocket attacks as well as a monthly projected business loss of $15,000 to 820,000. He also
seeks reimbursement for the rent he paid for an apartment in Jerusalem where his family took
shelter during the attacks, as well as for transportation costs. Mr. Greenberg supplied no records
of past eamings, bank records, accounting statements, tax returns, rent receipts or forensic
reports supporting his claimed losses. In the absence of these documents, the Special Master
recommended that Theodore Steinberg receive no award for economic losses.
Jared Sauter testifies that he lost tools with a “combined estimated value of . .. 815,000”;
that his family was compelled to spend their life savings of “about 810,000” when they fled their
home; and that he spent “about $5,000 out of pocket” for therapy sessions. He provided no
receipts verifying the value of the stolen tools or for the expenses the family incurred during their
time away from home. Mr. Sauter similarly supplied no bank statements verifying his alleged
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withdrawals from the family savings account and no invoices for the therapy his family
underwent Accordingly, the Special Master recommended that Jared Sauter receive no award
for economic damages.
Yair Mor describes in detail the losses he purportedly sustained as a result of the 2006
Hezbollah rocket attacks. He seeks compensation for his projected business loss of “a minimum
of 350,000 Shekels ($100,000)” in income for the “six months” his business was “standing
practically vacant until the tourists began returning to Tzfat”; “approximately $18,000” he spent
on hotels while in Tel Aviv; lost inventory which “amounted to approximately 95,000 Shekels (a
little over 827,000); and “150,000 Shekels (approximately 844,000),” in wages he claims to have
paid his skilled workers while his business was closed. The Special Master observed, however,
that Mr. Mor supplied no documents supporting these losses. He submitted no tax returns, bank
statements, certified accounting reports lending credence to his loss of income. Mr. Mor
similarly supplied no receipts or credit card statements verifying his hotel expenditures; no
receipts or ledgers supporting his claimed loss of inventory; and no payroll records or bank
statements substantiating his alleged payments to his “skilled workers.” Based on the lack of
supporting documentation, the Special Master recommended that Yair Mor receive no award for
economic damages
Elisheva Aron alludes circumspectly to the financial hardships she endured as a result of
the forced shutdown of her employer’s business and her subsequent unemployment She testifies
that the rocket attacks required her to temporarily abandon her horne which, in turn, forced her to
pay living expenses in two locations. Ms. Aron quantifies none of those losses, however and
appends no documentation from which an award can be fashioned Accordingly, the Special
Master recommended that Elisheva Aron receive no award for economic damages.
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Conversely, the Special Master recommended that Dvora Kaszemacher receive financial
compensation due to the losses she incurred when her art gallery was forced to close. The
Special Master noted that Ms. Kaszemacher supported her claim with financial records that
included “spreadsheets” for years 2005, 2006 and 2007, indicating the gallery’s gross and net
income as well as a letter from her accountant certifying both to the accuracy of the calculations
contained in her submissions as well as to the fact that these numbers were identical to those
supplied to the lsraeli tax authorities Accordingly, the Special Master recommended that Dvora
Kaszemacher received $1 1,966.67 in economic damages for lost income.
lt is a well-settled proposition of law that, “[u]nlike damages for pain and suffering, lost
earnings are not hard to quantify, and the Court will not excuse plaintiffs’ failure to support the
claim for lost earnings with competent evidence.” Moradl`, 77 F. Supp. 3d at 71 (citation omitted).
In keeping with this principle, the Court concurs with the Special Master’s finding that Theodore
Greenberg, Jared Sauter, Elisheva Aron and Yair Mor failed to meet the minimum evidentiary
threshold supporting their respective claims for economic damages. The Court similarly concurs
with the Special Master’s finding that the evidence supplied by Dvora Kaszemacher amply
quantified her financial losses. Accordingly, the Court ADOPTS the Special Master’s
recommendations that Theodore Greenberg, Jared Sauter, Yair Mor, and Elisheva Aron receive
no award for economic damages. The Court similarly ADOPTS the Special Master’s
recommendation that Dvora Kaszemacher receive compensation in the amount of $l 1,966.67 for
the economic losses she sustained
D. Punitive Damages
The FSIA also permits the recovery of punitive damages, 28 U.S.C. § 1605A(c), aimed
“not at compensation but principally at retribution and deterring harmful conduct.” Exxon
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Shipping Co. v. Baker, 554 U.S. 471, 492 (2008). This Court has repeatedly observed that
“recurrent awards in case after case arising out of the same facts can financially cripple a
defendant, over-punishing the same conduct through repeated awards with little deterrent effect.”
Murphy, 740 F. Supp. 2d at 81 . The risk of overly punishing a defendant, however, must be
balanced against the need to deter “the brutal actions of defendants in planning, supporting and
aiding the execution of terrorist attacks.” O ’Brien, 853 F. Supp. 2d at 48 (quoting Rimkus v.
lslamic Republic oflran, 150 F. Supp. 2d 163, 184 (D.D.C. 2010)). To that end, this Court has
held that the calculation of punitive damages in cases arising out of terrorist activity should
adhere to the ratio of punitive to compensatory damages set forth in earlier cases arising out of
the similar events ln the past_ the Court has awarded $3.44 in punitive damages for each
compensatory dollar awarded Murphy, 740 F. Supp. 2d at 82-83. The Court will apply that ratio
here and award plaintiffs a total of $l26,633,268.54 in punitive damages
VI. PENDING MOTIONS
Following the issuance of the Special Master reports, plaintiffs filed two motions The
first, is captioned Motion to Special Master to Reconsider/Modify his Recommendations with
Regard to the Kaplan Plaintiffs was filed on April 18, 2016 (“Kaplan Motion for
Reconsideranon”) (09-cv-646) (ECF si). in the Kaplan Motion for Reconsideraiion, plaintiffs
seek to revisit several of the Special Master’s decisions, particularly, his recommendations (1)
that Rabbi Kaplan be awarded compensatory damages for pain and suffering in the amount of $2
million; (2) that Rabbi Kaplan receive no economic damages; and (3) that Mushka, Reuven and
Menachem Kaplan receive no damages for pain and suffering Plaintiff do not seek review of
the Special Master’s recommendation that Chana and Efraim Kaplan receive no damages for
pain and suffering
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Plaintiffs" second motion, filed on April 19, 2016 is captioned Motion to Special Master
to Reconsider/Modify his Recommendations with Regard to Plaintiffs Noa and Netiya Erdstein
(09-cv-646) (ECF 82) (“Erdstein Motion for Reconsideration”). There, plaintiffs seek
reconsideration of the Special Master’s recommendation that no damages be awarded to Mushka,
Reuven, and Menachem 'Kaplan.
Plaintiffs do not challenge the Special Master’s findings of facts in either of their
motions They similarly take no issue with the Special Master’s application of the law. lnstead,
they ask that additional information be considered _ information that not only was available prior
to the issuance of the Special Master’s reports, but was not tendered in response to numerous
requests by the Special Master for clarification.
The Court is constrained, at the outset, to observe that Rule 53(f) sets forth procedures to
be followed by parties who object to the recommendations of the Special Master and by the
district court judge to whom the case is assigned lt does not provide for the Special Master’s
reconsideration of his own dispositions The Court will therefore consider the two motions as if
directed to this Court, in the first instance.
A. Standard of Review
Before delving into the relative merits of plaintiffs’ reconsideration requests, a few
prefatory comments are in order. The Court’s review of the Kaplan and Erdstein Motions for
Reconsideration is guided by Fed. R. Civ. P. 53(f)(1) which provides, in relevant part, that, “[i]n
acting on a master’s order, report, or recommendations the court must afford an opportunity to
be heard and may receive evidence, and may: adopt or affirm; modify; wholly or partly reject or
reverse; or resubmit to the master with instructions.” (Emphasis added.) Findings of fact and
conclusions of law are reviewed de novo. F ed R. Civ. P. 53(f)(3)(4). Significantly, de novo
_18_
review “does not necessarily mean a review that includes the submission of new evidence,
particularly when, as in the instant case, evidentiary proceedings previously occurred before the
Special Master,” Commissariat %22a l ’Energie Atoml`que v. Samsung Electronics Co., 245
F.R.D. 177, 179 (D. Del. 2007)_ and the record is “sufficiently developed” to permit the Court to
“merely conduct a a’e novo review” of the challenged decisions and make “its own independent
determination.” Luby v. Team.s'ters Health, Welfare and Pensl`on Trusl‘ Funa'S, 944 F.2d l 176,
1185 (3d Cir. 1991)).
The plain language of Rule 53(f) coupled with the “sufficiently developed” record before
the Special Master compels the conclusion that the Court, faced with objections to the Special
Master reports, is under no obligation to consider new evidence. The Court is guided by the fact
that the rules governing review of a Special Master’s determinations are analogous to those
which guide federal district courts sitting in an appellate capacity of rulings by magistrates and
bankruptcy courts ln those situations courts need not consider new evidence.
For example, Rule 72(b)(3) provides that, upon reviewing rulings of a federal magistrate,
“[t]he district judge may accept, reject, or modify the recommended disposition; [or] receive
further evidence.” Id. The Advisory Committee Notes explain that “[t]he term “a’e novo” . . .
does not indicate that a second evidentiary hearing is required” Similarly, 28 U.S.C. §
636(b)(1)(C) provides that the district judge “may accept, reject, or modify” the findings made
by the magistrate and “)nay receive further evidence,” (emphasis added), and requires only that a
‘44
district court consider the record which has been developed before the magistrate [judge] and
make his own determination on the basis of that recora’, without being bound to adopt the
findings and conclusions of the magistrate [judge].”’ Taberer v. Ar)nstrong World Ina’uslries,
]nc., 954 F.2d 888, 904 (3d Cir.1992) (emphasis added) (quoting United States v. Rada’atz, 447
_19_
U.S. 667, 675 (1980)). ln those instances an objecting party is not permitted “to present new
initiatives to the district judge.” Taylor v. Distrz`cl of Columbl`a, No. 15-685 (RBW), ---
F.Supp.3d ---, 2016 WL 4687326 *1 (D.D.C. September 07, 2016)).
Obj ections to rulings by the Bankruptcy Court are subject to similar review. Bankruptcy
Rule 9033(d) provides that a “district judge may accept, rej ect, or modify the proposed findings
of fact or conclusions of law, receive further evidence, or recommit the matter to the bankruptcy
judge with instructions.” (Emphasis added) This rule has been interpreted as one “which may
be solely on the record and without any additional hearing or evidence.” Matter of Hz`pp, lnc.,
895 F.2d 1503, 1519 (5th Cir.1990).
Beyond the plain language of Rule 53(f)(2), the consequences of allowing a party to
supplement the record while on appeal before the district court are not insignificant At
minimum, it frustrates all of the “systemic efficiencies” inherent in the Special Master’s
appointment, Net2Phone, Inc. v. Ebay, Inc., No. 06-2469 (KSH), 2008 WL 8183817, *4 (D. N.J.
June 26, 2008), and effectively renders all of the proceedings before Spe`cial Master wholly
redundant Indeed, “it would be fundamentally unfair to permit a litigant to set its case in motion
before the [Special Master] . . . and-having received an unfavorable recommendation--shift
gears before the [reviewing] judge.” Dunkin ’ Donuts Franchl`sed Restaurants LLC v. Mehta,
Civ. No. 07~0423, 2007 WL 2688710, at *1_2 (W.D. Pa. 2007) (citing Paterson-Leitch Co., Inc.
v. Massachuselts Municl`pal Wholesale Electric Co., 840 F.2d 985, 991 (1st Cir. 1988)). These
concerns are particularly acute here, as plaintiffs’ reconsideration requests challenge neither the
Special Master’s findings of fact nor his application of the law and seek only to introduce new
evidence in the hope of a different outcome.
_2()_
In light of the foregoing, the Court is disinclined to allow a party to introduce new
evidence at this juncture. lt will make an exception, in this instance, for no other reason than to
demonstrate that the supplemental information plaintiffs seek to insert into the record does
nothing to undermine the Special Master’s recommendations
B. Kaplan Motion for Reconsideration
1. Compensatory Damages for Rabbi Kaplan’s Pain and Suffering
Plaintiffs ask the Court to increase the 82 million award for pain and suffering
recommended by the Special Master. The Court’s review of the record indicates that the Special
Master recommended a downward departure from the 85 million baseline established in Davz's,
882 F. Supp. 2d at 12, and Pelerson, 515 F. Supp. 2d at 547, after Rabbi Kaplan failed to supply
any original medical records emergency room notes or the audiological exams referenced in Dr.
Alan Friedman’s report, diagnosing Rabbi Kaplan with permanent hearing loss The Court
further notes that the one paragraph “memorandum” submitted by Dr. Ronald Korman in support
of Rabbi Kaplan’s disability failed not only to include Dr. Korman’s curriculum vitae but did not
include the “attached hearing test from April 16, 2012” referenced in his report. lt bears mention
that the Special Master afforded plaintiffs numerous opportunities to supplement the record and
that plaintiffs did, indeed, file several such supplements none of which filled these gaps
Plaintiffs concede their failure to produce the aforementioned medical records - attributing their
omissions to “inadvertence.” Kaplan Motion for Reconsideration, at 3.
On the record before him, the Special Master evaluated Rabbi Kaplan’s injuries against
previous awards made to victims with similar injuries ln Davis, for example, the Court found
the Special Master’s recommendation of 85 million to a serviceman who suffered hearing loss
and severe PTSD as a result of a terrorist attack, to be excessive and reduced the award to 82
_21_
million. la'., 882 F. Supp. 2d at 13. Again, in Bland v. lslamic Republic oflran, 831 F. Supp. 2d
150, 156 (D.D.C. 201 1), the Court reduced the Special Master’s recommendation that
serviceman Robert Rucker, who suffered “lacerations on his left arm, bruising, blurred vision,
impaired hearing and a sore head from being hit by concrete” as well as “post-traumatic stress
disorder,” from 85 million to 82 million. lt should be noted that, both in Davis and Bland, the
claimants submitted ample medical documentation corroborating their injuries
The Special Master applied the rationale adopted by the Court in these cases and
concluded that Rabbi Kaplan was entitled to a 82 million award
According to plaintiffs the records they now supply in support of Rabbi Kaplan’s appeal
confirm that he suffers from “otosclerosis”; “partial hearing loss”; and “tinnitus.” These records
do not, however, contradict Dr. Friedman’s initial prognosis that “the functional implications” of
Rabbi Kaplan’s “moderate conductive hearing loss” in his left ear “include difficulty localizing
sirens while driving (or walking), as well as being unable to perform certain jobs” which “may
require one or more hearing aids at a younger age than he would have otherwise.” Kaplan
Report, at 10. Plaintiffs’ latest submissions similarly do not undercut Dr. Friedman’s prognosis
that the hearing lost could be surgically remedied - a procedure Rabbi Kaplan chose not to
undergo. Ia’. at 8.
As to Rabbi Kaplan’s back pain, the Court agrees with the Special Master that the six-
month hiatus between the rocket blast and the first appearance of symptoms calls into serious
question any nexus between the two events Indeed, none of the records before the Special
Master or this Court purport to make such a connection. Even crediting the possibility that
Rabbi Kaplan’s back pain was somehow caused by the rocket blast, Dr. Friedman observation
that Rabbi Kaplan revealed a “full range of motion in the cervical and lumbosacral spines” does
_22_
not support his request for an increase in the 82 Million damage award recommended by the
Special Master.
Equally unavailing is plaintiffs’ attempt to compare Dr. Kaplan’s hearing impairment to
the traumas suffered by Stuart Hersh and Abraham Mendelson in Campuzano v. lslamic
Repul)lic of]ran. 281 F. Supp. 2d 258 (D.D.C. 2003). l\/lr. Hersh suffered permanent injuries
which included: “60 percent hearing loss tinnitus back pain, chronic ear infections burn scars
and difficulty walking”. ld. at 267. He further exhibited “symptoms common to PTSD,
including irritability, insomnia, anger, frustration, flashbacks, nightmares, and depression”; was
diagnosed with “permanent psychomotor retardation [and] a speech impediment”; and attempted
suicide as “a result of his emotional instability.” Id.
Mr. Mendelson, in turn, suffered “multiple shrapnel-caused entry wounds in his legs
burns that included a burned cornea, and a partially-severed ear.” His permanent injuries
‘“include[d] a perforated right eardrum, a partially-severed ear, partial hearing loss tinnitus large
scars and chronic headaches.” la'. at 266.
ln sum, plaintiffs’ invocation of Campuzano, serves only to underscore the inherent
weakness of their position and to bolster the propriety of the Special Master’s recommended
award The Court therefore ADOPTS the Special Master’s recommendation that Rabbi Kaplan
receive 82 l\/Iillion in compensatory damages for pain and suffering
2. Rabbi Kaplan’s Economic Damages
Plaintiffs next ask the Court to reconsider the Special Master’s decision denying
economic damages to Rabbi Kaplan. A review of the record reveals that the Special Master’s
predicated his recommendation on the fact that Rabbi Kaplan’s request for nearly 81 million was
speculative and without evidentiary foundation.
_23_
On appeal, plaintiffs attach a report captioned: "Expert Opinion [t]he Plaintiff Rabbi
Chaim Kaplan" drafted by CPA Dov Weinstein. ln his report, Mr. Weinstein sets forth a series
of calculations and concludes that the injuries sustained by Rabbi Kaplan during the 2006 rocket
attacks resulted in a total economic loss to Rabbi Kaplan of 7,238,3 07 New lsraeli Shekels or
1,912,367 in US Dollars. As superficially appealing as Mr. Weinstein’s charts and calculations
may be, an examination of his report reveals that his conclusions are grounded on statements
given by Rabbi Kaplan in the Declaration he supplied to the Special Master and a single "Form
106 salary summary from 2013.” ln other words plaintiffs ask the Court to award almost 82
Million in lost economic opportunities based on unconfirmed testimony and a “salary summary”
from 2013 - seven years after the Hezbollah rocket attacks
The Court declines plaintiffs’ invitation, finding nothing in plaintiffs’ latest submissions
to warrant overturning the Special Master’s recommendation The Court therefore ADOPTS the
Special Master’s recommendation that Rabbi Kaplan receive no economic damages
3. Compensatory Damages for Mushka, Reuven, and Menachem’s Pain
and Suffering
Plaintiffs seek reconsideration of the Special Master’s recommendation that Mushka,
Reuven, and Menachem Kaplan receive no compensatory awards for pain and suffering The
Court’s review of the record reveals that the Special Master’s recommendation followed his
finding that the only evidence attesting to the trauma suffered by the Kaplan children was
statements made by their parents to the effect that, following the rocket attacks Mushka,
Reuven, and Menachem became “introverted”; had “trouble sleeping”; experienced “night
~s_ ca
terrors”; became “clingy' , obsessed with safety”; had “difficulty toilet training”; and trouble
“socializing with peers” Plaintiffs supplied neither direct testimony from the children nor any
psychological evaluation reports
_24_
The Special Master could find no reason for the absence of direct evidence. There was
nothing in the record suggesting any “special problems of proof,” Hill, 328 F.3d at 685, which
might explain and perhaps niitigate, plaintiffs’ failure either to supply the children’s declarations
or to have them professionally evaluated Accordingly, the Special Master concluded that
plaintiffs failed either to "prove damages ‘in the same manner and to the same extent’ as any
other default winner," Hi`ll, 328 F.3d at 683-84, or to "prove the fact of injury with reasonable
celtainty," Samarl`lan lnns, lnc., l 14 F.3d at 1235, and denied their claims
Plaintiffs concede “that Special Master Balaran is correct in that they did not sufficiently
detail those injuries and they should consult an expert.” Kaplan Motion for Reconsideration, at
7. Rather than remedy this deficiency by securing the sworn statements of the Kaplan children
or have them assessed professionally, plaintiffs supplied psychological reports by Dr. Rael
Strous who never met with or formally evaluated any of the Kaplan children, diagnosed all three
773
children as “exhibit[ing] some form of ‘unspecified anxiety disorder and PTSD. Relying
exclusively on the observations of Chaim and Rivka Kaplan and despite never having observed
the Kaplan children’s behavior, tested their reactions taken any notes or made further inquiries
Dr. Strous concluded that, “with the trauma coming as it did so early in their development . . . it
is expected that many aspects of the trauma and its repercussions will continue to affect these
children for a significant period of time.” Ia'. at 8.
The Court finds Dr. Strous’ “expert” testimony singularly unpersuasive The Court’s
inquiry into the probative value of Dr. Strous’ diagnoses necessarily requires an examination into
the material from which his opinion is fashioned and the reasoning by which Dr. Strous evolved
from that material to his conclusion. lt does not rest in his mere expression of conclusion. And
as the only bases for Dr. Strous’ conclusions are the observations of Chaim and Rivka Kaplan -
_25_
witnesses who could hardly be characterized as “disinterested” -the Court is disinclined to credit
Dr. Strous’ diagnoses Stated altematively, repeating observations made by parties with an
interest in the outcome of the case and shrouding those observations in an expert report does not
transform them into competent evidence. Plaintiffs` attempt to repackage evidence that did not
pass evidentiary muster in the first instance does not alter the Special Master’s finding that
Mushka, Reuven and Menachem failed to “prove the fact of injury with reasonable certainty.”
For the foregoing reasons the Court ADOPTS the Special Master’s recommendation that
no compensatory damages for pain and suffering be awarded to Mushka, Reuven and Menachem
Kaplan.
C. Erdstein Motion for Reconsideration
Plaintiffs seek reconsideration of the Special l\/Iaster`s recommendation that two of Brian
and Karene Erdstein’s children, Noa and Netiya, receive no compensatory damages for pain and
suffering As with the Kaplan Motion for Reconsideration, plaintiffs do not contest the Special
Master’s finding of facts or his application of the law. They seek, instead, to supplement the
record by filling in the evidentiary gaps highlighted in the April 4, 2016 Report of Special
Master Pursuant to Order of Reference Regarding the Claims of Brian, Karene, Mayan, Noa,
Netiya and Ariel Erdstein (09-cv-646) (ECF 75) (“Erdstein Report”).
The Court’s review of the record reveals that the Special l\/laster’s decision was based, in
large part, on the May 2012 Declarations of Brian and Karene Erdstein who testified being
unable to “point to a direct change in [Noa’s Netiya’s and Ariel’s] behavior” as a result of the
attacks “since they were very little” at the time of tlie bombing.” Plaintiffs explain that Brian
and Karene Erdstein “now, after speaking to their children “understand that even they did not
fully understand the extent of the emotional trauma,” and that they “only had their children’s best
_26_
interests at heart when they previously decided not to probe their emotional trauma." Erdstein
l\/lotion for Reconsideration` at 2. According to plaintiffs both parents “in hindsight [] realize
that Special Master Balaran is correct in that they did not adequately detail those injuries,” id. at
2. and they “now understand both that more evidence was required by Special Master Balaran.
and that their girls have suffered greatly and deserve to present that to the Court.” ld. at 3-4.
Neither Brian nor Karene Erdstein submitted affidavits in support of these assertions
Iiistead, they supplied the affidavits of their children as well as the psychological evaluation
reports of Dr. Strous who diagnosed Noa with “moderate to severe post-traumatic stress
disorder” as well as “mild unspecified anxiety” and Netiya with “moderate post-traumatic stress
disorder" and “mild unspecified anxiety disorder."
The Court finds plaintiffs’ representations less than compelling When they executed
their Declarations in 2012 4 six years after the rocket attacks - Brian and Karene each testified
being unable to “point to a direct change in [Noa’s, Netiya’s and Ariel`s] behavior.” ln their
submissions before this Court filed in 2016, plaintiffs assert that Brian and Karene, in f act, knew
or suspected their children were trauniatized, but “had their children’s best interests at heart
when they previously decided not to probe their emotional trauma.” Erdstein Motion for
Reconsideration, at 4. The Court finds it implausible that Brian and Karene Erdstein observed
no discernible change in their children in six years after the bombings only to be alerted to the
possible trauma they may have suffered ten years after the rocket attacks - more specifically
after the Special Master issued his report. lt is plain that plaintiffs used the Erdstein Report as a
roadmap to correct and supplement their initial submissions hoping the glaring inconsistencies in
the record would go unnoticed The Court did, however, notice and finds neither the statements
_27_
made by Noa and Natiya nor the expert report of Dr. Strous who relied on those statements an
adequate basis to overturn the Special l\/laster’s recommendations
The Court therefore ADOPTS the Special l\/laster’s recommendation not to award any
compensatory damages for pain and suffering to Noa and Netiya Erdstein.
Vll. CONCLUSION
F or the foregoing reasons the Court denies both the Kaplan Motion for Reconsideration
and the Erdstein Motion for Consideration and ADOPTS all of the recommendations set forth in
his reports and awards plaintiffs 83 8,161,966.67 in compensatory damages and 8131,277,165.34
in punitive damages in the proportions set forth in the Order and Judgment accompanying this
opinion, issued this date.
SO ORDERED.
qua /}/DV»M/%c
Ro§/ce C. Laiiiberth
United States District Judge
DATE; 7/9'7' //b
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