Neglected consequences of the terrorism exception to the Foreign Sovereign Immunities Act.

• Author: Rocklage, Andrew

Leibovitch v. Islamic Republic of Iran, 697 F.3d 561 (7th Cir. 2012).

The Foreign Sovereign Immunities Act (FSIA) provides the sole basis for asserting jurisdiction over foreign nations in United States courts, declaring, "[a] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided." (1) The terrorism exception of the FSIA abrogates this general immunity when a foreign state commits, or provides material support for the commission of, a terrorist act and that act results in the death or injury of a United States citizen. (2) In Leibovitch v. Islamic Republic of Iran, (3) the United States Court of Appeals for the Seventh Circuit considered whether, under the FSIA terrorism exception, subject-matter jurisdiction exists over emotional distress claims brought by the foreign-national family members of a U.S. citizen arising out of injuries inflicted in a terrorist attack. (4) The Seventh Circuit held subject-matter jurisdiction existed, reversing the United States District Court for the Northern District of Illinois, and resolving a previously unanswered question. (5)

On June 17, 2003, members of the Leibovitch family were traveling through Israel in an area bordering the West Bank. (6) The Leibovitch family was traveling with S.L., a three-year-old American citizen, despite West Bank travel warnings from both the United States Department of State Bureau of Consular Affairs and the United States Department of State Bureau of Diplomatic Security. (7) Members of the Palestine Islamic Jihad (PIJ) crossed over from the West Bank into Israel and fired upon the Leibovitch's minivan. (8) S.L. was severely injured by gunfire. (9) S.L.'s foreign national grandparents and two other siblings survived the attack but witnessed the grave injuries inflicted upon S.L. (10)

The Leibovitch family brought suit against the Islamic Republic of Iran and its Ministry of Information and Security (collectively "Iran") in the United States District Court for the Northern District of Illinois seeking damages on behalf of each family member, none of whom are United States citizens. (11) The district court determined that S.L. was injured in "an act of ... extrajudicial killing" under the FSIA exception for terrorism. (12) However, the district court dismissed all claims raised by the members of the Leibovitch family, other than S.L., for lack of subject-matter jurisdiction. (13) Members of the Leibovitch family appealed, arguing their individual claims warranted subject-matter jurisdiction under Israeli law for intentional infliction of emotional distress arising from S.L.'s injury. (14) The Seventh Circuit reversed, holding the terrorism exception confers original jurisdiction over so-called "pass-through" claims brought by family members under foreign sources of law for harm caused by the injury of an American relative. (15)

As described below, the debate between Congress and the federal courts has convoluted the overall scope and appropriate interpretation of the aforementioned statutory exception. (16) As part of the Antiterrorism and Effective Death Penalty Act (AEDPA) of 1996, Congress initially amended the FSIA to add an exception for state sponsorship of certain acts of terrorism. (17) The language of the original terrorism exception left unresolved whether Congress intended this exception to create a federal private right of action. (18) In the absence of a substantive private right of action from a statute, plaintiffs must rely on underlying state or foreign law for a possible exception to sovereign immunity. (19) As a result, FSIA plaintiffs' reliance on a cause of action found in state or foreign tort law has been referred to as the "pass-through" approach. (20)

This unresolved private right of action encouraged Congress to enact a new provision creating a federal cause of action for plaintiffs against agents and officers of states that sponsor terrorism, known as the Flatow Amendment. (21) The Flatow Amendment makes punitive damages available, at least against the "official, employee, or agent" acting on behalf of the state sponsor of terrorism. (22) In enacting this statutory provision, "[Congress's] express purpose [was] to affect the conduct of terrorist states outside the United States, in order to promote the safety of United States citizens traveling overseas." (23) Although this amendment made no reference to direct suits against a foreign state, some courts read the Flatow Amendment in conjunction with the legislative history of 28 U.S.C. [section] 1605(a)(7) to infer a federal private right of action directly against a foreign state. (24)

These interpretations were rejected in Cicippio-Puleo v. Islamic Republic of Iran, where the D.C. Circuit reasoned that without express language providing for a private right, federal courts should refrain from implying a cause of action. (25) Although the statutory language created a cause of action against only officials, employees, or agents of state sponsors of terrorism, Congress had also conferred broader jurisdiction on federal courts to hear claims directly against a foreign state. (26)

Congress soon responded to the convoluted issues of the FSIA terrorism exception by replacing both 28 U.S.C. [section] 1605(a)(7) and the Flatow Amendment with a new statute that uses a very similar grant of jurisdiction while adding new categories of potential claimants. (27) Congress expressly created a private right of action for compensatory and punitive damages against a "foreign state" and "any official, employee, or agent of that foreign state while acting within the scope of his or her office, employment, or agency." (28) The new statute permits four categories of claimants to invoke the private right of action: (i) United States Citizens; (ii) members of the military; (iii) United States employees; and (iv) the legal representatives of a person described in (i), (ii), or (iii). (29)

In Leibovitch, the Seventh Circuit reasoned that although S.L.'s family members did not fall within any of the four categories of claimants outlined in 28 U.S.C. [section] 1605A(c), the subject-matter jurisdiction conferred in 28 U.S.C. [section] 1605A(a) creates a broader category of claimants. (30) The court recognized the plain text and meaning of 28 U.S.C. [section] 1605A(a) does not require both the claimant and the victim to be American citizens, but rather extends jurisdiction to either the claimant or the victim. (31) Undertaking a more thorough analysis, the court looked to the legislative intent of the current provision, including a House Report explaining the expressed intent of the drafters was to ensure recovery for foreign national family members. (32)

The court further determined that the overall jurisdiction-conferring structure of the FSIA supports the interpretation that the pass-through approach and Congress's creation of a private right of action are separate and distinct, and by bringing a claim against Iran under Israeli law, S.L.'s family members would be making traditional use of the FSIA. (33) The court looked to Congress's principal objective in permitting massive judgments of civil liability against state sponsors of terrorism in an attempt to deter state support for terrorism. (34) With this principle objective in mind, the court rationalized that while 28 U.S.C. [section] 1605A(c) provides a cause of action for American citizen plaintiffs, allowing those classes enumerated in the statute to forgo the pass-through approach and assert claims on the basis of the federal statute alone, Congress had not provided a "specific source of law" for foreign national family members who cannot bring a claim under 28 U.S.C. [section] 1605A(c). (35) Therefore, the court ruled the pass-through approach continues to apply to this class of plaintiffs, who have established subject-matter jurisdiction over their claims for emotional distress arising out of the injuries inflicted upon S.L. (36)

The most salient and perhaps coincidently ignored issue underlying Leibovitch is the issue of enforceability under the terrorism exception of the Foreign Sovereign Immunities Act. (37) As of 2008, punitive damages awarded under the terrorism exception amounted to nearly $7.3 billion, while compensatory damages amounted to roughly $6.6 billion. (38) Defendant states, like Iran, have not been paying off the judgments entered against them in American courts, and often, as is the case in Leibovitch, do not even show up to present a defense in court. (39) Due to the more recent 2008 FSIA amendment, a court may be able to attach some of a foreign states property located in the U.S. to use for execution of a judgment, but because these attachments tend to be so low it is unlikely this more recent legislation will actually deter state sponsors of terrorism. (40) The U.S. government has responded to the aforementioned lack of payment by unilaterally assigning itself as Iran's creditor, distributing millions to the families of Iranian-backed terrorism...