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Stutts v. De Dietrich Group

June 30, 2006

JAMES STUTTS, ET AL., PLAINTIFFS,
v.
THE DE DIETRICH GROUP, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Glasser, United States Senior District Judge

MEMORANDUM AND ORDER

Plaintiffs are a proposed class of military servicemen or civilian employees of United States Department of Defense contractors who were deployed in the Persian Gulf region during the 1991 Gulf War ("Gulf War").*fn1 They seek relief for damages sustained as a result of exposure to toxic agents contained in chemical weapons developed or otherwise obtained by the Iraq government and ultimately detonated by the United States and its allies ("Coalition forces") during the Gulf War conflict. Plaintiffs assert causes of action against two classes of defendants: the "Supplier Defendants," foreign corporations that allegedly sold chemical precursors and manufacturing equipment to Iraq that was used to develop the chemical weapons to which plaintiffs were exposed, and the "Bank Defendants," foreign corporations that acted as correspondent banks under letters of credit issued in favor of the Supplier Defendants to support the sale of goods and services by the Supplier Defendants to Iraq. The Bank Defendants*fn2 have moved to dismiss plaintiffs' complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. For the reasons that follow, the Court grants the Bank Defendants' motion in its entirety.

FACTS

This case arises out of the plaintiffs' alleged exposure to sarin nerve gas, mustard gas and other chemical weapons when they were deployed in the Middle East during the Gulf War between January 16, 1991 and April 30, 1991. Compl. ¶ 2. Plaintiffs were exposed to those chemical agents when Coalition forces blew up weapons storage facilities in Iraq and chemical weapons were detonated. Plaintiffs allege that Saddam Hussein used chemical weapons against civilians in Iraq and other neighboring countries and that, despite the widespread knowledge of Hussein's illegal actions, the Supplier Defendants provided him with goods and services that enabled his regime to use chemical weapons.

Plaintiffs' allegations against the Bank Defendants are based on their issuance of letters of credit to the Supplier Defendants in the 1980s. The complaint alleges that the Bank Defendants were aware or reasonably should have been aware of Iraq's use of chemical weapons against Kurdish and other Iraqi citizens prior to the 1991 Gulf War and during Iraq's war with Iran. Compl. ¶¶ 80, 87. Notwithstanding this knowledge, the Bank Defendants allegedly issued letters of credit as correspondent banks to the Iraq government "for the benefit of the Supplier Defendants in connection with the sale of goods and services used by Saddam Hussein's regime to produce and/or obtain chemical weapons of mass destruction." Compl. ¶¶ 40-75, 87. The complaint describes the process of issuing letters of credit as follows: a "correspondent bank" takes steps to ensure that the sales transaction meets the requirements of the buyer and then pays the seller the amount due under a letter of credit. Id. ¶ 88. In the process of acting as correspondent banks, the Bank Defendants would have had to review documents pertinent to the transaction and knew or should have known, therefore, about the parties and goods -- namely, manufacturers of chemical agents or production equipment -- involved in the transactions. Id. Plaintiffs allege that by providing these services, the Bank Defendants themselves violated international laws involving restrictions on chemical weapons and enabled Hussein's regime to carry out extreme acts of violence.

In the complaint, plaintiffs seek compensatory and punitive damages against the Bank Defendants under the Anti-Terrorism Act, 18 U.S.C. § 1331 et seq., the Geneva Convention of 1925, United Nations Security Council Resolutions 582, 588, 596, 612 and 620,*fn3 customary international law, and the common law torts of aiding and abetting tortious conduct, civil conspiracy, negligence, and negligence per se.

DISCUSSION

When deciding a motion to dismiss for failure to state a claim for relief under Fed. R. Civ. P. 12(b)(6), a court takes the facts as alleged in the complaint to be true, and must draw all reasonable inferences from those facts in favor of the plaintiff. See Ortiz v. Cornetta, 867 F.2d 146, 149 (2d Cir. 1989). A court must not dismiss a complaint "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [the plaintiff] to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

I. Violations of the Anti-Terrorism Act

A. Primary Violations of § 2333 (Count I)

1. "International Terrorism"

Plaintiffs assert a cause of action against defendants under 18 U.S.C. § 2331 et seq., the Anti-Terrorism Act (the "ATA"). See Compl. Count I. The complaint alleges that the Bank Defendants' provision of "financial support used to assist Saddam Hussein's Iraqi regime in the manufacture and stockpiling of chemical weapons constitutes an action of 'international terrorism' as defined in 18 U.S.C. § 2333." Compl. ¶ 111.

That section of the ATA states in pertinent part: Any national of the United States injured in his or her person . . . by reason of an act of international terrorism . . . may sue therefor in any appropriate district court of the United States. . . .

The Bank Defendants' primary argument for dismissal of the claim is that plaintiffs fail to sufficiently allege that defendants were involved in "international terrorism" within the meaning of the statute. Def. Mem. at 7. The ATA defines "international terrorism" to include activities that "(A) involve violent acts or acts dangerous to human life that are a violation of the criminal laws of the United States" and "(B) appear to be intended (I) to intimidate or coerce a civilian population; [or] (ii) to influence the policy of a government by intimidation or coercion . . . and (C) occur primarily outside the territorial jurisdiction of the United States. . . ."*fn4 18 U.S.C. § 2331. Apparently in an effort to sufficiently allege a violation of the criminal laws of the United States as required by § 2331, the complaint states: "Section 18 U.S.C. § 229(a) make [sic] it unlawful for any person to 'assist . . . in any way' in the development or acquisition of chemical weapons." Compl. ¶ 109.*fn5

Plaintiffs' sole allegation of conduct by the Bank Defendants is that they issued letters of credit in favor of the Supplier Defendants. See Compl. ¶ 111. The plain language of the ATA compels the conclusion that, by engaging in commercial banking activity, the Bank Defendants were not involved in "violent acts or acts dangerous to human life." Nor were their actions designed to coerce civilians or government entities as required under § 2331. Thus, the Bank Defendants' conduct does not constitute international terrorism.*fn6

Case law interpreting § 2333 compels the same result. Both parties cite Boim v. Quranic Literary Institute & Holy Found. for Relief & Dev., 291 F.3d 1000 (7th Cir. 2002). The Court finds Boim relevant in that it arose in an analogous factual context and adopts its reasoning. In that case, plaintiffs' son was killed in Israel in a drive-by shooting by two Palestinians who were known members of the military faction of Hamas, the extremist Palestinian organization and a recognized terrorist group by the U.S. as of 1995. Id. at 1002. Plaintiffs brought an action under 18 U.S.C. § 2333 against, inter alia, two non-profit organizations that, as the alleged main fronts for Hamas in the United States, raised and funneled money to Hamas overseas. Id. at 1003. In particular, plaintiffs alleged that the funds that defendants provided to Hamas and its members generally paid for weapons, lodging, training, and transportation, among other things, and specifically for the "vehicle, machine guns and ammunition used to kill" their son. Id. at 1004. Based on these allegations, the court considered whether "funding simpliciter of a terrorist organization" alone constitutes "international terrorism" under § 2333. First, the court rejected the defendants' argument that the statute only imposes liability on those who have directly committed a violent act within the definition of "international terrorism" in § 2331. It held that the "statute clearly is meant to reach beyond those persons who themselves commit the violent act that directly causes the injury." Id. at 1011. Relying on principles of tort law to delimit the reach of § 2333 liability, the court held that a plaintiff must show that a donor of funds had knowledge and intent to further the donee's use of the funds for violent criminal acts. Id. Thus, funding simpliciter does not constitute an act of international terrorism. Because plaintiffs failed to allege that defendants donated money to Hamas with the knowledge and intent that such funds would be used to support the murder of plaintiffs' son, the court found that plaintiffs failed to state a claim under this theory of liability.

Id. at 1012.

Plaintiffs in this case are correct that the statutory history of § 2331 et seq., see Boim, 291 F.3d at 1009-11, indicates Congress's intent that liability under the statute is far-reaching. See Pl. Opp. at 36-38. Nevertheless, plaintiffs fail to sufficiently allege facts showing the Bank Defendants' knowledge and intent. Given the court's decision in Boim that direct funding of terrorist activity does not subject a defendant to liability under § 2333, a fortiori the actions of the Bank Defendants in issuing letters of credit to manufacturers who allegedly sold chemicals and equipment to Iraq do not constitute "international terrorism."*fn7

2. Injury "By Reason Of"

Section 2333 of the ATA permits an action for those injured "by reason of an act of international terrorism." According to the Boim court, that language implies a proximate cause requirement such that it must be reasonably foreseeable that a defendant's conduct is likely to result in violent criminal acts. 291 F.3d at 1012 (citing Holmes v. Sec. Investor Protection Corp., 503 U.S. 258 (1992) (interpreting "by reason of" language in civil RICO provision to require a showing that the defendant's conduct proximately caused the plaintiff's injury)). That court found that the murder of plaintiffs' son was not a reasonably foreseeable result of defendants' direct funding of Hamas. Id.

Plaintiffs' complaint insufficiently alleges that defendants' actions proximately caused their injuries. Plaintiffs assert that Iraq's use and stockpiling of chemical weapons throughout the 1980s and prior to Gulf War I made it "foreseeable that the chemicals being sold to Iraq during the relevant time period would be used as an instrument of state-sponsored and international terrorism." Compl. ¶ 111. Additionally, plaintiffs allege that "the connections and cooperation between agents of the Iraqi regime and known terrorist organizations made it foreseeable that plaintiffs and other U.S. citizens and members of its armed services would be exposed to chemicals and chemical weapons stockpiled in Iraq." Compl. ¶ 112. Similarly, they allege that because of the "widespread publicity about Iraq's illegal use of chemical weapons," "Defendants" were on notice that their services "were likely to be used in an unlawful and dangerous manner by Saddam Hussein's regime." Compl. ¶ 95. Such general publicity does not provide a causal link between the Bank Defendants' conduct and the plaintiffs' injuries. Plaintiffs allege no facts, nor can they, to demonstrate that it was reasonably foreseeable to the Bank Defendants that issuing letters of credit to manufacturers would in any way contribute to Saddam Hussein's use of chemical weapons or a fortiori "the manufacture of chemical weapons in Iraq." Compl. ¶ 96 (emphasis added). Plaintiffs fail to sufficiently allege that the Bank Defendants proximately caused plaintiffs' injuries, which they allege directly resulted from exposure to chemical weapons that were detonated by Coalition forces in the Gulf War.*fn8

3. Exemption for "Act of War"

As an additional rationale for plaintiffs' failure to state a claim under § 2333, the Bank Defendants contend that plaintiffs' injuries were the result of "acts of war" and therefore fall within an exception to the statute. Section 2336 states: "no action shall be maintained under section 2333 of this title for injury or loss by reason of an act of war." The term "act of war" is defined in § 2331 as "any act occurring in the course of (A) declared war; (B) armed conflict, whether or not war has been declared between two or more nations; or (C) armed conflict between military forces of any origin." Plaintiffs contend that this provision is inapplicable because some of their injuries occurred during March 1991, after the ceasefire in Gulf War I was declared on February 28, 1991. Pl. Opp. at 39. Additionally, plaintiffs argue that their injuries occurred as a result of "friendly fire" and that § 2336 does not apply to injuries "that just happen to occur during wartime." Id.

The Court is not persuaded by plaintiffs' arguments. Plaintiffs' allegations that the allegedly unlawful acts occurred during the "1991 Persian Gulf War" (Compl. ¶ 1) put this case squarely within the exemption under § 2336 for "acts of war." See Def. Mem. at 7. Moreover, plaintiffs' allegation that their injuries resulted from the detonation of chemical weapons by Coalition forces during the 1991 Persian Gulf War makes clear that plaintiffs have suffered "injury or loss by reason of" declared war or armed conflict. 18 U.S.C. § 2336. The "act of war" exemption under § 2336 thus provides another basis on which to dismiss plaintiffs' claim under the ATA for failure to state a claim for relief. Accordingly, because plaintiffs fail to allege that the Bank Defendants' acts of international terrorism caused the injuries they received during the Persian Gulf War, their claim is dismissed.*fn9

B. Aiding and Abetting Violations of § 2331 et seq. (Count II)

Plaintiffs assert a cause of action for aiding and abetting violations of the ATA and allege that the Bank Defendants "knowingly and substantially participated in [the international terrorism] of the Iraqi regime of Saddam Hussein in that . . . the Bank Defendants knew or recklessly disregarded acknowledging that the Iraqi government was using goods and services supplied to commit acts of international terrorism."

Compl. ¶ 118.

The Bank Defendants argue that they are entitled to dismissal of plaintiffs' aiding and abetting claim under the ATA because no such cause of action exists. Although in Boim, the Seventh Circuit recognized such a cause of action, the Bank Defendants argue that the Boim court misinterpreted the Supreme Court's holding in Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164 (1994), in reaching its conclusion. They argue that Central Bank stands for the proposition that "a federal civil remedy for aiding and abetting is available only where it is expressly provided for by statute." Def. Mem. at ...


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