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In re 650 Fifth Avenue and Related Properties

United States District Court, S.D. New York

February 28, 2017


          OPINION & ORDER

          KATHERINE B. FORREST, District Judge

         This is a civil forfeiture action initially filed in 2008. Plaintiffs - a group of individual victims of terrorism in which Iran participated (or their estates), along with the United States - seek forfeiture of properties and assets owned by Assa Company Ltd. and Assa Corporation (together, “Assa”), [1] the Alavi Foundation (“Alavi”), and their partnership the 650 Fifth Avenue Company (“650 Fifth Ave.”) (together with Alavi, “Claimants” or “defendants”). Discovery in this case closed in stages; the last stage ended on June 28, 2013.

         Trial was previously set to commence on September 9, 2013. On the eve of trial, the Court indicated that it intended to grant summary judgment to plaintiffs and adjourned the trial. The Court issued its Opinion & Order on September 16, 2013. (ECF No. 865.) The crux of that decision was twofold: First, the Court determined that Assa was (and is) a front for the Government of Iran and violated the International Emergency Economic Powers Act (“IEEPA”), certain Iranian Transaction Regulations (“ITRs”) issued by the United States Treasury banning the provision or export of services to Iran, and federal money laundering statutes. Second, the Court determined that defendants also violated the IEEPA and the ITRs, because it was conceded that defendants provided services to Assa.

         The Second Circuit affirmed this Court's decision that Assa was in fact a front for Iran, but reversed and remanded with regard to certain other issues concerning the defendants. See In re 650 Fifth Ave. & Related Properties, 830 F.3d 66 (2d Cir. 2016). The Second Circuit held, inter alia, that this Court erred in rejecting defendants' possible statute of limitations defense without providing defendants an opportunity to be heard on that defense. Id. at 96-97.

         Having received the mandate from the Second Circuit, this Court has resumed proceedings and has scheduled trial necessary for final resolution of this matter. In connection with these proceedings, defendants now seek to reopen discovery. Specifically, defendants claim that discovery is necessary to support their statute of limitations defense; defendants allege that “[d]uring the pre-appeal litigation phase of this forfeiture action, [they] sought, but were repeatedly denied, discovery critical to their statute of limitations defense, i.e., discovery that would show when the Government first learned of the alleged acts giving rise to forfeiture.” (ECF No. 1439 at 2.) In support of their application, defendants cite footnote 28 of the Second Circuit's decision, where the court stated: “The District Court had repeatedly denied Claimants' attempts to obtain discovery that might show when the Government learned of the Claimants' alleged forfeitable offenses.” In re 650 Fifth Ave, 830 F.3d at 97 n.28.

         For the reasons discussed below, the Court DENIES defendants request to reopen discovery. Defendants are entitled to be heard on their statute of limitations defense, as the Second Circuit held. Defendants are not entitled to new discovery, however, in order to present their defense. Critically, defendants misrepresent the pre-appeal record and status of discovery that preceded the Second Circuit's opinion. Likewise, it appears that the Second Circuit was not provided with a complete overview of the discovery history in this case.

         This Court and the parties spent vast amounts of time and energy on discovery issues over a period from 2012 until June 28, 2013. There were multiple hearings and many motions. In deciding to deny defendants instant request, the Court has conducted a comprehensive review of the previous discovery in this case, much of which is detailed in the body of this opinion. As discussed, the discovery that defendants now seek regarding the statute of limitations is discovery that defendants did not timely seek before. By not pursuing this discovery before, the Court finds that defendants have waived their entitlement to it. In short, the Court is unwilling to reopen discovery at this late stage.

         I. DISCUSSION

         A. The Recent Requests

         Defendants now seek discovery related to their statute of limitations defense. The specific discovery requests at issue (the “Recent Requests”) are appended as Exhibit E to defendant's January 13, 2017, letter application (ECF No. 1439-5). The Recent Requests consume three single spaced pages and seek a sweeping array of documents, including:

● “Records, reports, memoranda, correspondence, notes, and other documents . . .” contained in twelve specifically enumerated FBI files and their related or cross-references files (id. ¶ 1(a) - (l));
● “Records, reports, memoranda, correspondence, notes, and other documents . . .” contained in three additional groups of Government investigation files - defining the Government to include the Department of Justice (“DOJ”), the Department of Treasury (“DOT”), joint federal-state task forces or investigative entities and all successors or predecessors - based on references in certain documents (id. ¶ 1(m)(i)-(iii));
● Documents from and between the Government and New York State or other state authorities, including the New York Attorney General, the New York City Police Department, and the District Attorney's Office for New York County (id. ¶ 2(a)-(c)); and
● Documents relating to communications between “Government agents or employees and the journalists who authored” nine specifically enumerated articles, as well as all documents identifying or relating to investigative steps taken or other efforts taken in response to such articles or the allegations raised in them (id. ¶ 3(a)-(g)).

         The Government has objected to producing these materials as outside the scope of defendants' original discovery requests, as overbroad and unduly burdensome, and because certain documents are protected from disclosure by applicable privileges. (See ECF No 1439-6.)

         When the Court received defendants' discovery application, it struck the Court that defendants appeared to seek a variety of documents far beyond those ever raised in motion practice during the discovery period. Accordingly, by Order dated January 18, 2017, the Court ordered defendants (with regard to their statute of limitations defense) to provide “the Court with a chronology and description of discovery previously sought (including reference to specific requests); identify any previous motions to compel made by Claimants; summarize the arguments made in any such motions to compel; and point to where in the record the Court made ruing with regards to any such previous requests or motions to compel.” (ECF No. 1440). Defendants complied with the Court's order by submission dated January 25, 2017. (ECF No. 1445.)

         Defendants' January 25 submission demonstrates that defendants had not, in fact, made any of the Recent Requests during the discovery period; and defendants certainly did not bring a motion to compel with regard to any of the materials sought in the Recent Requests during the discovery period.

         B. Defendants' First Requests

         Defendants argue that their prior requests were sufficiently broad to encompass the Recent Requests. Specifically, defendants claim that “[d]ocuments relevant to [their] statute of limitations defense fell squarely within those requests” served on May 26, 2011 (“defendants' First Requests”). (ECF No. 1445 at 5.) In support, defendants primarily rely on request number one in defendants' First Requests. (Id.; see ECF No. 1145-2.) This request, which defendants admit functioned as a “catchall” request, sought: “All documents cited, quoted, or referenced in the Complaint, or which in any way relate to the allegations in the Complaint.” (ECF No. 1145-2 at 7; see ECF no. 1445 at 5.)

         It is plain that, on its face, this catchall request was directed at the affirmative allegations brought against defendants; it does not mention defendants' statute of limitations defense nor does it mention any of the documents sought in the Recent Requests (let alone all of them). The only way the Court could construe this request as capturing the documents sought in the Recent Requests is if the Court were to accept that such a broad “catchall” requested all documents on any topic in any way relating to this action. For the Court to read this request in such a manner would be both unfair and unreasonable; the Court declines to do so.

         Defendants next argue that requests numbers four and six in defendants' First Requests “called for more specific categories of documents likely to yield admissible evidence supporting the statute of limitations defense.” (ECF No. 1445 at 6.) Defendants similarly argue that requests sixteen and seventeen encompass documents clearly responsive to the Recent Requests. (ECF No. 1445 at 6-7.)

         Request number four sought:

All documents relating to any agreement, practice, promise, joint effort, or understanding, formal or informal, between Claimants and Iran, including but not limited to any agreement whereby [] Claimants would obtain or maintain ownership interests on behalf of Iran, or undertake any efforts on behalf of Iran, contribute capital on behalf of or at the direction of Iran, provide services on behalf of Iran, or take direction from Iran.

         (ECF No. 1445-2 at 7.) Request number six sought:

All documents relating to any alleged services performed, requested to be performed, or considered by Claimants on behalf of Iran, including but not limited to the alleged services described in paragraph 21 of the Complaint.

(Id. at 8.) Request number sixteen sought:

All documents relating to the ownership, control, or management of Assa, including but not limited to documents relating to requests, acts, or efforts to determine the ownership and/or management of Assa, and Assa's responses to such efforts.

(Id. at 9.) Request number seventeen sought:

All documents relating to Claimants' purported knowledge, or lack of knowledge, that Assa was owned, controlled, or in any way affiliated with Bank Melli or that Assa consisted of merely two “shell companies.”


         These requests are, again, plainly directed at the affirmative allegations in the Complaint. Defendants assert that “[d]ocuments responsive to [requests sixteen and seventeen] would include materials from the FBI, the IRS, the OFAC, and other federal agencies relating to Assa from 1989-when Assa was incorporated-to the present.” (ECF No. 1445 at 7.) But defendants did not seek specific investigation files or specific correspondence among the Government that would support an argument that the Government knew or should have known long before about the conduct giving rise to its claims. Again, it would be unfair and unreasonable to interpret these requests as seeking the extraordinarily broad discovery defendants' Recent Requests now seek.

         Finally, defendants also point to requests thirteen through fifteen and thirty-six through forty in defendants' First Requests, alleging that these requests specifically sought “federal agencies' internal files.” (ECF No. 1145 at 7.) However, none of these requests encompasses the specific materials sought in the Recent Requests and none of these requests raises the statute of limitations issue.

         Request number thirteen sought documents related to Claimants' Internal Revenue Code § 501(c)(3) status. (ECF No. 1445-2 at 9.) Request number fifteen sought documents relating to the Alavi Foundation's prior mortgage and/or loan from Bank Melli on 650 Fifth Avenue. (Id.) Request number thirty-six sought documents and internal files “relating in any way to the allegations in the Complaint”; Request number thirty-seven sought documents relating to Assa's designation as a “Specially Designated National”; Request number thirty-eight sought documents broadly relating to Claimants, Assa, or the allegations in the Complaint provided by the Government, or received from New York State, the City of New York, the New York Police Department, the District Attorney's Office or “any other office or agency”; and Request numbers thirty-nine and forty mirror Request number thirty-eight but are directed at materials from any foreign government or received from a third party, respectively. (ECF No. 1445-2 at 13-14.)

         These requests are, again, exceedingly broad and general. Beyond the chronology and descriptions provided by defendants in connection with this motion, the Court has conducted its own comprehensive review of the previous discovery in this case. This review allowed the Court to determine whether, during the discovery period, defendants had in fact interpreted their requests to have the breadth that they now claim, and whether defendants made specific motions to compel linking specific categories of documents to defendants' statute of limitations defense. Below, the Court provides a detailed account of the ...

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