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Honickman v. Blom Bank Sal

United States District Court, E.D. New York

January 14, 2020

MICHAL HONICKMAN for the ESTATE OF HOWARD GOLDSTEIN, et al., Plaintiffs,
v.
BLOM BANK SAL, Defendant.

          MEMORANDUM & ORDER

          Hon. Kiyo A. Matsumoto, United States District Judge

         Plaintiffs are victims, or the relatives of victims, of attacks conducted by Hamas, a designated Foreign Terrorist Organization (“FTO”), [1] between December 2001 and August 2003 in Israel and the Palestinian Territories (“Plaintiffs”). Plaintiffs commenced this action pursuant to the Anti-Terrorism Act (“ATA”), as amended by the Justice Against Sponsors of Terrorism Act (“JASTA”), 18 U.S.C. § 2333(d), to recover damages from BLOM Bank SAL (“BLOM, ” or “Defendant”) for allegedly aiding and abetting Hamas' commission of terrorist acts by providing financial services to Hamas through three of BLOM's customers who are alleged to be Hamas affiliates: the Sanabil Association for Relief and Development (“Sanabil”), Subul Al-Khair, and the Union of Good (collectively, BLOM's “Three Customers”). These organizations are alleged to have engaged in non-violent conduct in furtherance of Hamas' goals.

         Defendant moves to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that Plaintiffs have not plausibly alleged the elements of JASTA aiding-and-abetting liability as set forth in Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983), and adopted by the Second Circuit in Linde v. Arab Bank, PLC, 882 F.3d 314 (2d Cir. 2018). Specifically, Defendant argues that the complaint does not plausibly allege that BLOM (1) aided the persons or entity who carried out the attacks which caused their injuries, (2) was generally aware that, by providing financial services to the Three Customers, it was playing a role in Hamas' violent or life-endangering activities (the “general awareness” element), or (3) knowingly provided substantial assistance to Hamas (the “substantial assistance” element).

         For the reasons set forth below, the Court finds that Plaintiffs' complaint does not plausibly allege the general awareness or the substantial assistance elements necessary to plead JASTA aiding-and-abetting liability. Defendant's motion to dismiss Plaintiffs' complaint pursuant to Rule 12(b)(6) for failure to state a claim is GRANTED.

         Background[2]

         Plaintiffs are individuals, or the relatives of individuals, who suffered injuries in one of twelve violent attacks carried out by Hamas in Israel and the Palestinian Territories between December 1, 2001 and August 19, 2003. (See ECF No. 1, Complaint (“Compl.”), ¶ 1.) Plaintiffs sue Defendant, a major bank headquartered in Beirut, Lebanon (id. ¶ 504-05), for allegedly aiding-and-abetting Hamas' commission of terrorist attacks, like those which caused Plaintiffs' injuries.

         Much of Plaintiffs' complaint is dedicated to describing Hamas' use of a civil infrastructure, which Plaintiffs call its “da'wa, ” to compete with other organizations for support in the areas in which it operates. (See Compl. ¶ 511, n.6.) It appears that the complaint's focus on Hamas' da'wa is predicated on Plaintiffs' theory of liability, that BLOM is liable because it provided financial services to its Three Customers, all of which are alleged to be “da'wa institutions in Lebanon tasked by Hamas to extend [its] reach into [local] Palestinian refugee camps” through the provision of charitable services and financial support to the local populations. (Id. ¶¶ 526, 610-11, 626.)

         I. The Three Customers

         Because BLOM's alleged liability turns principally on its knowing conduct, and because its alleged provision of support to Hamas is indirect, the court reviews in detail Plaintiffs' allegations regarding the relationship between each of the three BLOM account holders with Hamas, Hamas' activities, and BLOM's alleged knowledge or awareness of the relevant facts.

         A. Sanabil

         “Hamas established [the] Sanabil Association for Relief and Development” in 1994. (Id. ¶ 574.) Sanabil served as “Hamas' da'wa headquarters in Lebanon until late 2003.” (Id. ¶ 588.) “Between 1998 and 2001, [Sanabil] received millions of dollars in support from Hamas' fundraising network” and “channeled those funds to the Palestinian refugee camps in Lebanon to build Hamas' support within that community.” (Id.)

         Plaintiffs' allege that Sanabil is, in sum and substance, an alter ego of Hamas and, thus, BLOM is liable. As noted above, because knowledge is an integral component of a claim for civil aiding-and-abetting liability, the court considers which, if any, of Plaintiffs' allegations support the position that BLOM knew of Sanabil's alleged relationship with Hamas or Sanabil's alleged involvement in Hamas' violent acts at the time BLOM provided financial services to Sanabil.

         1. Sanabil's Connection to Hamas

         Plaintiffs do not allege that BLOM knew or was aware of a relationship between Sanabil and Hamas. Instead, Plaintiffs cite to several public statements and developments, or facts alleged to be within the public knowledge, from which Plaintiffs assert it could be plausibly inferred that BLOM was aware of a nexus between Sanabil and Hamas. These include:

• The August 22, 2003 designation of Sanabil as a Specially Designated Global Terrorist (“SDGT”)[3] by the U.S. Treasury Department and accompanying press release, which stated that Sanabil “receives large quantities of funds raised by major Hamas-affiliated charities . . . and, in turn, provides funding to Hamas” (id. ¶ 590);
• An August 23, 2003 report published by a Lebanese newspaper, Al-Saffir, stating that in August 2001, following an order given by an unspecified Hamas leader, Sanabil opened offices in Palestinian refugee camps in Lebanon to “increase its activity” (id. ¶ 589);
• Undated “reports” that in 2003, following a ruling from the Lebanese judiciary, the Sanabil organization in the town of Sidon closed, which closure was attributed to Sanabil's links to Hamas (id. ¶ 609), with the only example of such a report being an August 27, 2004 article published by a Lebanese newspaper, The Daily Star (id. ¶ 610).

         Plaintiffs do not allege that BLOM knew of the aforementioned facts. Moreover, none of the public statements cited in the complaint was published until after the last attack.

         Plaintiffs also allege that BLOM's knowledge of a nexus between Sanabil and Hamas could be inferred from the fact that Sanabil received payments from organizations later revealed to be affiliated with Hamas. The following provides a brief overview of the payments Sanabil received from organizations with alleged affiliations with Hamas:

Holy Land Foundation (“HLF”). HLF was a U.S.-based charitable organization founded in October 1993. (Id. ¶ 555, 560.) BLOM processed roughly $1 million in payments in 2000 and $350, 000 in 2001 from HLF to Sanabil through BLOM's New York correspondent accounts. (Id. ¶¶ 596-99.) The date of the last payment was September 7, 2001. (Id. ¶ 599.) The U.S. Treasury Department designated HLF as an SDGT on December 4, 2001. (Id. ¶ 567.) BLOM is not alleged to have processed any transactions from HLF to Sanabil following HLF's designation as an SDGT.
KindHearts. Kindhearts was a U.S.-based charitable organization founded in January 2002. (Id. ¶ 615.) Sanabil received $250, 000 from KindHearts between July 2002 and July 2003 (id. ¶ 603). The U.S. Treasury Department first took action against Kindhearts on February 19, 2006, when it froze the organization's accounts (id. ¶ 619), well after the last of the attacks at issue in this action on August 19, 2003 (id. ¶ 76).[4]
Al-Aqsa Foundation (“Al-Aqsa”). Al-Aqsa was a Germany-based charitable organization founded in July 1991. (Id. ¶ 549.) Sanabil received at least $50, 000 from Al-Aqsa between April and May 2003. (Id. ¶ 604.) The U.S. Treasury Department designated Al-Aqsa an SDGT on May 29, 2003 due to its connection with Hamas. (Id. ¶ 553-54.) BLOM processed one transfer from Al-Aqsa to Sanabil the day after its designation, but Plaintiffs do not allege any later transfers from Al-Aqsa to Sanabil's account at BLOM. (Id. ¶ 605.)[5]

         With one exception, BLOM did not process any payments from the aforementioned organizations to Sanabil after the U.S. Treasury Department took action against them, including by designating two of them as SDGTs.

         2. Sanabil's Connection to Hamas' Violent Acts

         Plaintiffs do not allege that BLOM knew of a nexus between Sanabil and Hamas' violent acts, or that Sanabil itself played a role in Hamas' violent activities. Rather, the allegations in the complaint suggest that Sanabil engaged in charitable acts rather than any acts related to terrorism:

• An August 27, 2004 article published by The Daily Star stated that Sanabil “had sponsored 1, 200 Palestinian families and spent around $800, 000 on orphans and $55, 000 on needy patients” (id. ¶ 610);
• “Records seized from HLF show that Sanabil regularly distributed small sums in cash from its accounts to hundreds (if not thousands) of individual dependents in the Palestinian refugee camps under the categories of ‘Orphan Sponsorships,' ‘Student Sponsorships,' ‘Needy Sponsorships' and ‘Family Sponsorships'” (id. ¶ 611); and
• The only invoice attached to Plaintiffs' complaint which indicates a “purpose” for a payment Sanabil received from the aforementioned organizations states that it was for “help concerning orphan children” (id. Ex. D).

         The only portion of the complaint connecting Sanabil's funds to Hamas' activities is Plaintiffs' allegation that Sanabil operated on Hamas' behalf “in a manner of an old-style political machine, buying loyalty in periodic stipends of $40-50 per quarter.” (Id. ¶ 612.) But Sanabil is not alleged to have engaged in any violent acts, either on its own or in conjunction with Hamas.

         B. Subul Al-Khair

         Plaintiffs allege fewer details regarding Subul Al-Khair. Subul Al-Khair “is a small Hamas institution founded in Beirut, Lebanon in 1998.” (Id. ¶ 621.) Defendant maintained an account for Subul Al-Khair at its Rawsheh branch in Beirut and “deposited [over $500, 000] in transfers sent by HLF to Subul Al-Khair” between 1999 and 2001. (Id. ¶¶ 623, 625.) Plaintiffs do not specify the date of the last HLF payment to Subul Al-Khair in 2001, but there is no allegation that it occurred after the December 4, 2001 designation of HLF as an SDGT by the U.S. Treasury Department (id. ¶ 567).

         1. Subul Al-Khair's Connection to Hamas

         Plaintiffs do not allege that BLOM knew of Subul Al-Khair's nexus to Hamas, nor do Plaintiffs cite any public statements regarding Subul Al-Khair's relationship with Hamas. Plaintiffs' only allegation suggesting that BLOM was aware of a nexus between Subul Al-Khair and Hamas is that “Subul al-Khair was identified as an unindicted co-conspirator in HLF's criminal trial” (id. ¶ 622), but this trial did not begin until sometime in 2004 (id. ¶ 567), well after the transactions BLOM processed on behalf of Subul Al-Khair.

         2. Subul Al-Khair's Connection to Hamas' Violent Acts

         Plaintiffs' similarly do not allege that BLOM was aware of a connection between Subul Al-Khair and Hamas' violent activities, or that any such nexus existed. The complaint states that “Subul al-Khair functioned much like Sanabil, but was more focused on Hamas supporters in the Beirut area.” (Id. ¶ 624.) Subul Al-Khair “regularly distributed small sums in cash from its accounts to individual[s] under the categories of ‘Orphan Sponsorships' and ‘Student Sponsorships.'” (Id. ¶ 626.) And, like Sanabil, Subul Al-Khair “paid small amounts individually in a manner of an old-style political machine, buying ...


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