Freeman v. HSBC Holdings PLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

-------------------------------------------------------x

KATHALEEN FREEMAN, et al.,

Plaintiffs, MEMORANDUM & ORDER

18-CV-7359 (PKC) (CLP)

- against - 19-CV-2146 (PKC) (CLP)

HSBC HOLDINGS PLC, HSBC BANK PLC,

HSBC BANK MIDDLE EAST LIMITED,

HSBC BANK USA, N.A., BARCLAYS,

STANDARD CHARTERED BANK, ROYAL

BANK OF SCOTLAND, N.V., CREDIT

SUISSE, BANK SADERAT PLC,

COMMERZBANK AG, and JOHN DOES 1-

50,

Defendants.

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RYAN BOWMAN, et al.,

Plaintiffs,

- against -

HSBC HOLDINGS PLC, HSBC BANK PLC,

HSBC BANK MIDDLE EAST LIMITED,

HSBC BANK USA, N.A., BARCLAYS,

STANDARD CHARTERED BANK, ROYAL

BANK OF SCOTLAND, N.V., CREDIT

SUISSE, BANK SADERAT PLC,

COMMERZBANK AG, and JOHN DOES 1-

50,

Defendants.

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PAMELA K. CHEN, United States District Judge:

In November 2014, a group of American citizens killed or injured by terrorist attacks in

Iraq between 2004 and 2011, and/or their families, filed an action, Freeman, et al. v. HSBC

Holdings PLC, et al., 14-CV-6601 (PKC) (CLP) (“Freeman I”), against ten banking institutions—

HSBC Holdings, PLC, HSBC Bank PLC, HSBC Bank Middle East Ltd., HSBC Bank USA, N.A.

(collectively, “HSBC”), Barclays Bank PLC (“Barclays”), Standard Chartered Bank (“SCB”),

Royal Bank of Scotland, N.V. (“RBS”), Credit Suisse AG (“Credit Suisse”), Bank Saderat PLC

(“Saderat”), and Commerzbank AG (“Commerzbank”)—as well as John Does 1–50, seeking

damages pursuant to the Antiterrorism Act (the “ATA”), 18 U.S.C. § 2333, as amended by the

Justice Against State Sponsors of Terrorism Act (“JASTA”),1 Pub. L. No. 114-222, 130 Stat. 852

(2016). See Freeman v. HSBC Holdings PLC, 413 F. Supp. 3d 67, 72 (E.D.N.Y. 2019) (“Freeman

I”). While Freeman I was pending, a different group of Americans who were injured or killed by

terrorist attacks in Iraq, and/or their families, represented by the Freeman I counsel, filed these

two additional actions, Freeman, et al. v. HSBC Holdings PLC, et al. 18-CV-7359 (PKC) (CLP)

(“Freeman II”), and Bowman, et al. v. HSBC Holdings PLC, et al., 19-CV-2146 (PKC) (CLP)

(“Bowman”), seeking damages under the ATA and JASTA against the same defendants for

materially the same conduct.2

On September 16, 2019, the Court dismissed Freeman I in its entirety. See generally

Freeman I, 413 F. Supp. 3d 67.3 Pending before the Court are Defendants’4 motions to dismiss in

1 JASTA was enacted after the initiation of Freeman I and, though the complaint in that

case was not amended, the Court ultimately construed it as alleging a claim of secondary

conspiracy liability under JASTA in addition to the original primary liability claims under the

ATA. Freeman I, 413 F. Supp. 3d at 72 n.1.

2 For purposes of this Memorandum & Order, “Plaintiffs” refers to the plaintiffs in both

Freeman II and Bowman.

3 In dismissing Freeman I, the Court declined to adopt the Report and Recommendation

(“R&R”) of the Honorable Cheryl L. Pollak, Magistrate Judge, recommending denial of

Defendants’ motions to dismiss. See generally Freeman I, No. 14-CV-6601 (PKC) (CLP), 2018

WL 3616845 (E.D.N.Y. July 27, 2018). The Court denied the Freeman I Plaintiffs’ motion for

reconsideration of some of the Court’s decision in Freeman I at oral argument on October 28,

2019. (See Freeman I, 14-CV-6601, Oct. 28, 2019 Minute Order).

4 Defendant Saderat has not appeared in Freeman II or Bowman. On March 14, 2019, a

Certificate of Default was entered against Saderat in Freeman II. (No. 18-CV-7359, Dkt. 52.)

Accordingly, the Court’s decision on the pending motions to dismiss in Freeman II and Bowman

Freeman II and Bowman. For the same reasons articulated in Freeman I, the Court dismisses

Plaintiffs’ ATA claims and their JASTA conspiracy claims in Freeman II and Bowman. This

includes dismissing Count 6 of the Freeman II and Bowman Complaints against Defendant

Commerzbank for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure

(“FRCP”) 12(b)(2). In addition, the Court also dismisses Plaintiffs’ JASTA aiding and abetting

claims, which were not alleged in Freeman I, for failure to state a claim under FRCP 12(b)(6).

BACKGROUND

The Court assumes the parties’ familiarity with the facts of these two actions and with the

Court’s September 16, 2019 Memorandum and Order dismissing Freeman I. In brief, Plaintiffs

are alleging a wide-ranging conspiracy between Defendants, Saderat, the Government of Iran, and

multiple state-affiliated and private Iranian entities that, at times, operate as financial and logistical

conduits for the Islamic Revolutionary Guard Corps’ (“IRGC”) and Hezbollah’s terrorist activities.

Freeman I, 413 F. Supp. 3d at 73.5 Plaintiffs allege that the conspiracy was formed in 1987 for

does not apply to Saderat, and the term “Defendants” in this Memorandum and Order refers only

to the moving defendants. In addition, the Court directs the Bowman Plaintiffs (No. 19-CV-2146)

to move for a certificate of default as to Defendant Saderat within seven (7) days of this

Memorandum & Order.

5 The Court notes that, in Freeman II and Bowman, Plaintiffs have added allegations

detailing how Defendants helped Iran evade sanctions and the relationship between Iran and its

proxies and the designated terrorist groups. (See, e.g., Freeman II, No. 18-CV-7359, Am. Compl.,

Dkt. 72, ¶ 42(c) (describing how Defendants failed to complete the required screening of certain

messages and valuable letters of credit documents); id. ¶¶ 131–39 (relating how Iran continuously

evaded international sanctions); id. ¶¶ 140–56 (alleging that Defendants provided Iran with access

to the Eurodollar market which allowed Iran to continue funding various illicit schemes); id. ¶ 163

(“The Western Bank Defendants, however, knowingly and intentionally agreed to, and did,

manipulate tens of thousands of payment order messages . . . and the records of such transactions

to defeat such monitoring and screening, and prevent transparency, in order to provide USD funds

to Iran for unlawful uses, which foreseeably included the support of Iranian terrorism and terrorist

organizations.”); id. ¶¶ 192–207 (describing the function of letters of credit); id. ¶¶ 586–98

(explaining how MODAFL acquired aircraft engines and other parts); id. ¶¶ 726–27 (recounting

public statements by federal officials regarding HSBC’s “willful flouting of U.S. sanctions laws

and regulations”); id. ¶¶ 861–63 (“While neither Mahan Air nor Blue Sky Aviation was designated

the purposes of evading U.S. sanctions on financial and business dealings with Iran, conducting

illicit trade-finance transactions, concealing the involvement of Iranian agents in financial

payments to and from United States dollar-denominated accounts, and facilitating Iran’s provision

of material support to support terrorist activities and organizations, including Hezbollah. Id.

In addition to asserting the same seven claims alleged in the Freeman I complaint, Freeman

II and Bowman assert five claims for secondary liability, one for conspiracy, and four for aiding

and abetting under JASTA, 18 U.S.C. § 2333(d)(2).6 (Compare Freeman I, No. 14-CV-6601,

as a terrorist at the time the LCs [Letters of Credit] . . . were financed, [SCB] engaged in criminal

conduct in furtherance of the Conspiracy in order to aid these IRGC supply chain entities to evade

U.S. sanctions knowing that its own conduct was illegal . . . In sum, [SCB] affirmatively chose to

facilitate Iran’s illegal conduct and provide material support to its terror apparatus[.]”); id. ¶¶ 899–

900, 989, 1019 (summarizing how SCB’s participation assisted “Iran’s military and terror

apparatus”); see also id. ¶¶ 246–55, 259–75, 284–87, 297–300, 309–11 (adding new allegations to

explain how the IRGC and Hezbollah committed acts of international terrorism at the direction of

Iran and asserting that “Plaintiffs were foreseeably injured”).) The Court finds that, at their

essence, Plaintiffs’ claims with respect to the alleged conspiracy remain the same.

6 The JASTA conspiracy claim in each of the Complaints is essentially the same as the

JASTA conspiracy claims construed by the Court in Freeman I. See discussion supra note 1. The

JASTA aiding and abetting claims are asserted for the first time in Freeman II and Bowman.

Although Plaintiffs contend in their response to Defendants’ motions to dismiss that

“Plaintiffs have consistently maintained that each of their conspiracy and aiding and abetting

claims in Freeman I predicated on primary liability should also be treated as secondary liability

claims under § 2332(d)(2) once JASTA was enacted” (Freeman II, No. 18-CV-7359, Plaintiffs’

Response, Dkt. 76, at 2 n.1; see also Bowman, No. 19-CV-2146, Plaintiffs’ Response, Dkt. 41, at

2 n.1), the Court made clear that that was not the case at the hearing on the motion for

reconsideration in Freeman I. During the oral argument, the Court stated:

To the extent that I said at the first meeting with all the parties that I’m assuming

that the claims are being construed under JASTA as well . . . I was not in any way

endorsing the theory that you were alleging aiding and abetting along with

conspiracy under JASTA. . . . [The] letter [docketed as 222] seemed to stake out

the position . . . that the plaintiffs were relying on the conspiracy theory both for

purposes of primary liability under the ATA and then also under JASTA. That

certainly was the focus of the briefing thereafter.

* * *

Second Amended Complaint (“SAC”), Dkt. 115, ¶¶ 2179–293 with Freeman II, No. 18-CV-7359,

Amended Complaint (“Am. Compl.”), Dkt. 72, at ¶¶ 3724–86; Bowman, No. 19-CV-2146, Am.

Compl., Dkt. 21, at ¶¶ 1321–83.)

DISCUSSION

As in Freeman I, Defendants move to dismiss the Complaints in Freeman II and Bowman

(the “Complaints”), pursuant to FRCP 12(b)(6), on the basis that they fail to adequately assert

primary and secondary liability claims under the ATA and JASTA, and therefore fail to state a

claim for which relief can be granted. (Freeman II, No. 19-CV-2146, Defendants’ Motion to

Dismiss (“MTD”), Dkt. 75; Bowman, No. 18-CV-7359, MTD, Dkt. 34.) Defendant

Commerzbank, as before, separately moves to dismiss Count 6 of the Complaints for lack of

personal jurisdiction under FRCP 12(b)(2). (Bowman, No. 19-CV-2146, MTD, Dkt. 34, at 1 n.1.)

Because all but the aiding and abetting claims in Freeman II and Bowman are materially the same

as those asserted in Freeman I, the Court relies on, and incorporates by reference, its Freeman I

decision, and dismisses all of Plaintiffs’ ATA claims and their JASTA conspiracy claims in the

Complaints. See Freeman I, 413 F. Supp. 3d at 80–81 (resolving personal jurisdiction challenge);

81–94 (dismissing ATA primary liability and conspiracy claims); id at 95–98 (dismissing JASTA

conspiracy claim).7 The Court, therefore, addresses Defendants’ motion to dismiss with respect

to the only claims not alleged in Freeman I, Plaintiffs’ JASTA aiding and abetting claims.

Nowhere in any of your submissions have you actually used the words, We are

alleging aiding and abetting liability under JASTA, and even in your briefing now,

you simply say that one of the elements is met . . . but I just think the way you

proceeded is . . . a little disingenuous, to be perfectly frank, because you never

declared in this case that you were advancing an aiding and abetting theory.

(Freeman I, No., No. 14-CV-6601, Oral Argument Transcript, Dkt. 248, 44:18–46:2.)

7 Cases decided in this Circuit after Freeman I lend additional support to the Court’s

reasoning in Freeman I. For example, in Zapata v. HSBC Holdings PLC, 414 F. Supp. 3d 342,

I. Plaintiffs’ Aiding and Abetting Claims under JASTA

Plaintiffs’ Ninth Claim for Relief, brought against all of the defendants in Freeman II and

Bowman, asserts, inter alia, that “[t]he IRGC and Hezbollah together with their Iraqi agents and

proxies, including the Special Groups [a litany of Iraqi Shi’a terror groups], committed, planned

and authorized each attack alleged.” (See Freeman II, No. 18-CV-7359, Am. Compl., Dkt. 72, at

¶ 3742; see also id. ¶¶ 7, 3743–45.) Plaintiffs further assert that Defendants aided and abetted the

acts of international terrorism by “knowingly provid[ing] substantial assistance, directly or

indirectly, to the IRGC and its agents . . . and Hezbollah.” (Id. ¶¶ 3746–47.) Each Defendant,

according to Plaintiffs, had general knowledge of its role in the illegal laundering of money on

behalf of a State Sponsor of Terrorism, its banks, and its entities and agents, for the purpose of

concealing the transactions from United States’ authorities, which “directly or indirectly . . .

enabled Iran to facilitate its support and preparation for, and carrying out of, acts of international

355–58 (E.D.N.Y. 2019), the court considered proximate causation in the ATA context, and found

it lacking when plaintiffs did not allege “any relationship between [Defendant] HSBC’s money

laundering and the acts of violence perpetrated against them.” More specifically, the court noted

that plaintiffs did not allege “that the Cartels [i.e., the drug cartels serviced by HSBC] require

laundered money to carry out any acts of violence in Mexico, let alone the specific atrocities

inflicted upon Plaintiffs.” Id. at 356. The court also noted that “Plaintiffs acknowledge that the

Cartels have abundant cash resources, and there is no plausible inference that the Cartels would

not be able to commit these acts of violence without HSBC first laundering their money. Id.; id.

at 358 (“[T]he Cartels are not purely terrorist organizations and laundering money that the Cartels

independently accumulate is an act of a fundamentally different sort from giving terrorist

organizations money that they do not already have. Because Plaintiffs have failed to plead

proximate cause, their claims must be dismissed.” (internal citation omitted)); see also O’Sullivan

v. Deutsche Bank AG, No. 17-CV-8709 (LTS) (GWG), 2020 WL 906153, at *1, 4–5 (S.D.N.Y.

Feb. 25, 2020) (applying substantially similar proximate cause analysis as Freeman I in denying

plaintiffs, who were U.S. service members, or families of U.S. service members, injured or killed

in terrorist attacks in Iraq between 2003 and 2011, leave to amend previously dismissed ATA and

JASTA complaint); Kaplan v. Lebanese Canadian Bank, SAL, 405 F. Supp. 3d 525, 532–33

(S.D.N.Y. 2019) (finding, inter alia, that plaintiff’s “conclusory allegations” that the actions of a

bank, in “intentionally and/or recklessly providing extensive banking services to Hizbollah, which

caused the terrorist rocket attacks,” failed to plausibly establish proximate cause for ATA claim)

internal quotation marks, alterations, and citations omitted)).

terrorism.” (Id. ¶¶ 3748–51.) Plaintiffs contend that by “blinding” American authorities “to Iran’s

access to the financial system for the purpose of facilitating material support for terrorism,”

Defendants provided “unusual and unlawful banking services under unusual circumstances by

working closely and interactively with” their “Iranian counterparties.” (Id. ¶ 3751.) Moreover,

each Defendant had knowledge, “or knew of the substantial certainty, that some of the funds it

disguised and concealed would be used by Iran, the IRGC, Hezbollah, and their agents and proxies

to support and commit acts of international terrorism, and yet continued to provide assistance” for

multiple years. (Id. ¶¶ 3752–54.)

Plaintiffs’ Tenth Claim for Relief,8 brought against Commerzbank only, asserts that it

knowingly provided substantial assistance to Hezbollah through Hezbollah’s Martyrs Foundation

(the “Foundation”) in Lebanon. (Id. ¶¶ 3757–64.) The Complaints, however, do not allege any

8 Plaintiffs’ Tenth Claim for Relief, brought as an aiding and abetting claim in violation of

JASTA, is premised on substantially the same factual allegations as their Sixth Claim in Freeman

I, Freeman II, and Bowman, though this Sixth Claim is asserted as a conspiracy, rather than an

aiding-and-abetting claim. (Compare Freeman I, No. 14-CV-6601, SAC, Dkt. 115, ¶¶ 2264–73,

with Freeman II, No. 18-CV-7359, Am. Compl., Dkt. 72, at ¶¶ 3757–64 and Bowman, No. 19-

CV-2146, Am. Compl., Dkt. 21, ¶¶ 1354–61). In Freeman I, the Court dismissed the conspiracy

claim against Commerzbank for lack of personal jurisdiction. Freeman I, 413 F. Supp.3d at 80–

81. While the Court believes that the same analysis applies to Plaintiffs’ Tenth Claim, which is

based on the materially same facts, but alleges aiding and abetting instead of conspiracy,

Commerzbank has not moved to dismiss the Tenth Claim for lack of personal jurisdiction under

FRCP 12(b)(2). Instead, Commerzbank joins its co-defendants in moving to dismiss all of the

JASTA aiding and abetting claims in the Complaints for failure to state a claim under FRCP

12(b)(6). (See Freeman II, No. 18-CV-7359, MTD, Dkt. 75, at 1 n.2, 3–5; Bowman, No. 19-CV-

2146, MTD, Dkt. 34, at 1 n.2, 3–5.) “Personal jurisdiction, unlike subject-matter jurisdiction, can

. . . be purposely waived or inadvertently forfeited . . . [t]herefore, a district court should not raise

personal jurisdiction sua sponte when a defendant has appeared and consented, voluntarily or not,

to the jurisdiction of the court.” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 133

(2d Cir. 2011) (internal quotation marks and citations omitted). Because Defendant Commerzbank

has appeared and not moved to dismiss the Tenth Claim of the Complaints for lack of personal

jurisdiction, the Court deems Commerzbank as having consented to the Court’s jurisdiction for the

purposes of the Tenth Claim and, therefore, addresses it as part of Defendants’ motions to dismiss

pursuant to FRCP 12(b)(6).

facts as to the source, if any, of Commerzbank’s knowledge of the connection between Hezbollah

and the Foundation or between the Foundation’s fundraising activities and the terrorist attacks at

issue. (See id. ¶¶ 1193–94.)

Finally, Plaintiffs Twelfth Claim for Relief, asserted against SCB, Credit Suisse, and

HSBC for aiding and abetting in violation of JASTA, describes a conspiracy between IRISIL,

Mahan Air, and others to provide Hezbollah and other terrorist organizations with material support

to facilitate acts of terrorism, but does not allege any facts that these Defendants directly processed

funds for Hezbollah or any other terrorist organization. (See id. ¶¶ 3775–86.)

II. The Complaints Fail to Sufficiently Allege Aiding and Abetting under JASTA

A. Legal Standard

JASTA provides that liability may be asserted

for an injury arising from an act of international terrorism committed, planned, or

authorized by an organization that had been designated as a foreign terrorist

organization under section 219 of the Immigration and Nationality Act (8 U.S.C.

1189), as of the date on which such act of international terrorism was committed,

planned, or authorized, liability may be asserted as to any person who aids and

abets, by knowingly providing substantial assistance, or who conspires with the

person who committed such an act of international terrorism.

18 U.S.C. § 2333(d)(2). When Congress enacted JASTA, they indicated that “the proper legal

framework for federal civil aiding and abetting and conspiracy liability” claims under the statute

was Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983). Siegel v. HSBC N. Am. Holdings, Inc.,

933 F.3d 217, 223 (2d Cir. 2019) (internal quotation marks, alterations, and citation omitted). The

Circuit in Siegel used Halberstam to explain that

aiding-and-abetting includes three elements: (1) “the party whom the defendant

aids must perform a wrongful act that causes an injury;” (2) “the defendant must be

generally aware of his role as part of an overall illegal or tortious activity at the

time that he provides the assistance;” and (3) “the defendant must knowingly and

substantially assist the principal violation.”

Id. at 224 (adopting Halberstam’s aiding-and-abetting standard as the standard for analyzing a

JASTA aiding and abetting claim). To evaluate the “substantial” requirement of the third

element—knowing and substantial assistance of the principal violation—the Court must consider

“(1) the nature of the act encouraged, (2) the amount of assistance given by defendant,

(3) defendant’s presence or absence at the time of the tort, (4) defendant’s relation to the principal,

(5) defendant’s state of mind, and (6) the period of defendant’s assistance.” Linde v. Arab Bank,

PLC, 882 F.3d 314, 329 (2d Cir. 2018) (citing Halberstam, 705 F.2d at 483–84); see Siegel, 933

F. 3d at 225 (analyzing Linde factors in assessing “substantial assistance” prong of JASTA aiding

and abetting claim).

B. Application9

Any argument about the viability of Plaintiffs’ aiding and abetting claim under JASTA is

all but foreclosed by the Second Circuit’s decision in Siegel, 933 F.3d 217. In Siegel, the plaintiffs

were victims, or representatives of victims, of a series of terrorist attacks in Jordan on November

9, 2005, for which the terrorist organization al-Qaeda in Iraq (“AQI”) claimed responsibility. Id.

at 219. The plaintiffs sued various HSBC entities under JASTA for aiding and abetting AQI’s

perpetration of the attacks, by helping Al Rajhi Bank (“ARB”), a Saudi bank, evade U.S. sanctions

and by transmitting millions of dollars to ARB that were then transferred to AQI and other terrorist

9 The Court declines to adopt the approach urged by Defendants to simply rely on its

analysis from Freeman I regarding Defendants’ alleged knowledge or awareness of the terrorism-

related activities and goals of the Iranian entities for and to which Defendants transferred funds in

violation of U.S. sanctions—an issue that the Court addressed in the context of Plaintiffs’ ATA

conspiracy claims. (Freeman II, No. 19-CV-2146, MTD, Dkt. 75, at 5; Bowman, No. 18-CV-

7359, MTD, Dkt. 34, at 5); Freeman I, 413 F. Supp. 3d at 87 n.28. Instead, the Court separately

analyzes under Halberstam whether the Complaints sufficiently allege that Defendants were

“generally aware of [their] role as part of [the] overall illegal or tortious activity” engaged in by

“the person who committed [the] act of international terrorism.” Siegel, 933 F.3d at 223 (quoting

Halberstam, 705 F.2d at 477; 18 U.S.C. § 2333(d)(2)).

organizations to commit terrorist acts. Id. at 219, 220–21. In affirming the district court’s

dismissal of the plaintiffs’ aiding-and-abetting claim, the Siegel panel summarized its reasoning

as follows:

The plaintiffs argue that the defendants’ willingness to do business with Al Rajhi

Bank despite their knowledge of its links to terrorism is sufficient to expose the

defendants to aiding-and-abetting liability under JASTA. They are wrong. Like

the district court, we conclude that because the plaintiffs did not adequately allege

in their operative pleading . . . that the defendants knowingly played a role in the

November 9 attacks or provided substantial assistance to the terrorist organization

that perpetrated it, they failed to state a plausible claim for relief under JASTA.

Id. at 219. In particular, the Siegel panel found that the plaintiffs had “failed to allege adequately

two of the three Halberstam elements of civil aiding-and-abetting: (1) that HSBC was ‘generally

aware’ of its role as part of an ‘overall illegal or tortious activity at the time that [it] provide[d] the

assistance,’ and (2) that HSBC ‘knowingly and substantially assist[ed] the principal violation.’”

Id. at 224 (quoting Halberstam, 705 F.2d at 477).

The Circuit’s holding in Siegel dictates the same result here: Plaintiffs’ aiding and abetting

claims must be dismissed because they fail to adequately allege two of the three Halberstam

elements.10

10 The Court notes that with respect to the first Halberstam prong—i.e., that the defendant

aided the party that performed the wrongful act that caused the injury—there is an open question

as to how direct the defendant’s support must be. As the Second Circuit wrote in Siegel,

[JASTA] does not, by its terms, limit aiding-and-abetting liability to those who

provide direct support to terrorist organizations, and Congress wrote that its

purpose in enacting the statute was “to provide civil litigants with the broadest

possible basis” to seek relief against those who “have provided material

support, directly or indirectly, to foreign organizations or persons that engage in

terrorist activities against the United States.”

933 F.3d at 223 n.5 (quoting 18 U.S.C. § 2333 Statutory Notes) (emphasis in original); see also

Honickman for Estate of Goldstein v. BLOM Bank SAL (“Honickman”), ___ F. Supp. 3d ___, 2020

WL 224552, at *7 (E.D.N.Y. 2020). Indeed, in Siegel, when contrasting the relief provided by the

ATA with that provided by JASTA, the Circuit quoted JASTA as creating secondary liability

against “any person who aids and abets, by knowingly providing substantial assistance [to], or who

1. Halberstam Awareness Element

As the Second Circuit explained in Siegel:

In order to plead adequately the “general-awareness” element, a plaintiff must

plausibly allege that the defendant was “aware that, by assisting the principal, it is

itself assuming a role in terrorist activities.” See Linde, 882 F.3d at 329 (internal

quotation marks omitted). In Linde, we explained that although “[s]uch awareness

does not require proof of . . . specific intent” or knowledge “of the specific attacks

at issue,” it does require that “the bank was generally aware that[, by providing

financial services to a client,] it was thereby playing a ‘role’ in [the] violent or life-

endangering activities.” Id. We contrasted this with “the mens rea required to

establish material support in violation of 18 U.S.C. § 2339B, which requires only

knowledge of the organization’s connection to terrorism, not intent to further its

terrorist activities or awareness that one is playing a role in those activities.” Id. at

329–30.

Id. at 224; see Honickman, 2020 WL 224552, at *7 (explaining that defendant “must have known

[that] it was assuming a role in [the FTO’s] terrorist activities ‘at the time that [it] provide[d] the

assistance.’” (quoting Linde, 882 F.3d at 329)).11 As the court in Honickman further explained:

conspires with the person who committed[,] such an act of international terrorism,” Siegel, 933

F.3d at 222–23 (quoting 18 U.S.C. § 2333(d)(2)) (alterations in original)—thus, reinforcing an

interpretation of JASTA as creating aiding-and-abetting liability against one who provides

substantial assistance “[to]” the act of international terrorism, but not necessarily to the person who

committed that act.

The Court need not resolve that uncertainty here, given its finding that the Complaints fail

to adequately allege the second and third Halberstam elements, which requires dismissal of

Plaintiffs’ aiding and abetting claims. Siegel, 933 F.3d at 223–24, 223 n.4 (noting that with regard

to the first Halberstam element, “[w]e need not here decide whether JASTA’s reach is as limited

as [the defendant] suggests”—i.e., that “JASTA aiding and abetting lies only where a defendant

knowingly provides substantial assistance to the person who committed such an act of

international terrorism”—“because the plaintiffs’ claim fails even under their more expansive

interpretation of the statute.”).

11 In Honickman, the plaintiffs were victims and relatives of victims of terrorist attacks

committed by Hamas, and sued BLOM Bank SAL (“BLOM”) under the ATA and JASTA for

providing financial services to three organizations “alleged to have engaged in non-violent conduct

in furtherance of Hamas’ goals.” 2020 WL 224552, at *1. BLOM, however, was not alleged to

have engaged in illegal activity with any of the three organizations, such as violating U.S.

sanctions. See id. at *3. Relying primarily on Weiss, Linde and Siegel, the court dismissed the

complaint in Honickman, including the plaintiffs’ JASTA aiding and abetting claim. Id. at *7–9.

Although the facts underlying Honickman vary from those here, the Court finds instructive

“Evidence that [a bank] knowingly provided banking services to [an FTO], without

more, is insufficient to satisfy JASTA’s scienter requirement.” Weiss v. National

Westminster Bank PLC, 381 F. Supp. 3d 223, 239 (E.D.N.Y. 2019). This is because

“aiding and abetting an act of international terrorism requires more tha n the

provision of material support to a designated terrorist organization.” Linde, 882

F.3d at 329 (emphasis in original).

* * *

In light of this precedent, it is not enough for Plaintiffs to “plausibl[y] allege that

[the defendant bank] was ‘generally aware of [its] role’ in ‘terrorist activities,’ from

which terrorist attacks were a natural and foreseeable consequence.”. . . Adopting

this reading would, in effect, replace the scienter for aiding-and-abetting liability

with the lower scienter required for material support, in direct contravention of

Linde’s holding that the bank must be aware that it is assuming a role in the

organization’s “violent or life-endangering activities.” See Siegel, 933 F.3d at 224

(citing Linde, 882 F.3d at 329). Attempts to conflate these scienter requirements

have been rejected by courts within this circuit. See, e.g., Weiss, 381 F. Supp. 3d

at 238–39.

Id. at *7–8 (parenthetical for Weiss omitted).

Furthermore, even if, as here, the services provided by the Defendants are non-routine or

illegal, such as facilitating the FTO’s evasion of U.S. sanctions, this conduct still does not create

aiding and abetting liability under JASTA. As the court held in O’Sullivan v. Deutsche Bank AG,12

“allegations that Defendants knowingly violated laws that were designed principally to prevent

terrorist activity do not allege plausibly a general awareness that Defendants had assumed a role

in a foreign terrorist organization’s act of international terrorism.” No. 17-CV-8709 (LTS)

Honickman’s discussion about the second and third elements of Halberstam. See also Kaplan,

405 F. Supp. 3d at 535–36 (dismissing JASTA aiding and abetting claim brought against bank that

maintained accounts Hezbollah affiliates, based on the failure to satisfy Halberstam requirements).

12 The Court notes that the defendants named in Freeman I, Freeman II, Bowman, and in

O’Sullivan are mostly the same, including HSBC, SCB, Credit Suisse, and Saderat, and that the

nature of the claims and the theory of liability for all three cases is substantially the same.

(Compare O’Sullivan, 2020 WL 906153 at *1, n.1, with Freeman I, 413 F. Supp. 3d at 72, and

Freeman II, No. 18-CV-7359, Am. Compl., Dkt. 72, at 19–25, and Bowman, No. 19-CV-2146,

Dkt. 21, at 21–26.)

(GWG), 2020 WL 906153, at *6 (S.D.N.Y. Feb. 25, 2020) (emphasis in original). In other words,

it is not enough for a defendant-bank to be aware that its conduct violates the law—even one

intended to prevent terrorism—or that the organization or entity to which it is providing financial

services supports terrorist organizations; the bank must be aware that through its own conduct,

whether legal or illegal, it is assuming a role in actual terrorist activity. See Siegel, 933 F.3d at

225–26 (finding insufficient “allegations establish[ing], at most, that . . . HSBC helped ARB

violate banking regulations despite knowing that ARB supported terrorist organizations”).

Here, Plaintiffs simply do not plead any facts from which to plausibly infer that Defendants

were generally aware of their role in the actual acts of international terrorism committed by

Hezbollah in Iraq between 2004 and 2011, or even in the provision of material support to

Hezbollah by the IRGC or other Iranian entities.13 For example, Plaintiffs’ Tenth Claim for Relief,

asserted only as to Commerzbank, alleges that Commerzbank was “generally aware” that by

maintaining a bank account for the Hezbollah Martyrs Foundation, the bank was involved in giving

Hezbollah, “directly or indirectly,” access to the international financial system that allowed

Hezbollah to “effectively raise funds from donors outside of Lebanon.” (Freeman II, No. 18-CV-

7359, Am. Compl., Dkt. 72, at ¶¶ 1193–94, 3759.) What Plaintiffs do not plead is a direct

connection between the services that Commerzbank provided to the Foundation and any alleged

terrorist activities. Even assuming that the Foundation was an FTO at the time Commerzbank

maintained an account for the Foundation, the absence of any factual allegations showing a

13 This is not to say that, even if the allegations in the Complaints were sufficient to

establish that Defendants had provided, or conspired to provide, material support to a designated

terrorist organization, this conduct in itself qualifies as an international act of terrorism under the

ATA or JASTA. As the Court found in Freeman I, it does not. Freeman I, 413 F. Supp. 3d at 89–

93 (finding that even if Plaintiffs had sufficiently alleged violations of the material support statutes,

i.e., §§ 2339A and 2339B, those violations would not constitute acts of international terrorism, as

defined in § 2331(1), because the other elements of § 2331(1) are not met).

connection between the bank’s services and the terrorist activity at issue is fatal to Plaintiffs’ aiding

and abetting claim. See Honickman, 2020 WL 224552, at *7 (“‘Evidence that [a bank] knowingly

provided banking services to [an FTO], without more, is insufficient to satisfy JASTA’s scienter

requirement.’ This is because ‘aiding and abetting an act of international terrorism requires more

than the provision of material support to a designated terrorist organization.’”) (internal citations

omitted) (quoting Weiss, 381 F. Supp. 3d at 239; Linde, 882 F.3d at 329);14 see also Kaplan, 405

F. Supp. 3d at 536 (dismissing JASTA aiding and abetting claim brought against bank that

maintained accounts for Hezbollah affiliates, based on failure to sufficiently allege second

Halberstam element, because, inter alia, “although Plaintiffs assert[ed] that Defendant processed

millions of dollars’ worth of wire transfers through [Defendant’s] Accounts, Plaintiffs [did] not

plausibly allege that Hizbollah received any of those funds or that Defendant knew or intended

that Hizbollah would receive the funds”).

The Ninth and Twelfth Claims, brought against some or all Defendants, allege even less of

a connection between Defendants’ conduct and the terrorist acts at issue, and even fewer facts

supporting an inference that Defendants were aware that the assistance they were providing the

Iranian entities would be used to help Hezbollah or any other organizations or individuals carry

14 The absence of any allegations indicating that Commerzbank knew that the Foundation

had funded specific terrorist activities of Hezbollah distinguishes this case from Miller v. Arab

Bank PLC, 372 F. Supp. 3d 33 (E.D.N.Y. 2019). There, the court found that the plaintiffs had

sufficiently stated an aiding and abetting claim under JASTA based on “[t]he allegation that [the

defendant-bank] provided banking services ‘in an unusual way under unusual circumstances,’—

including by administering the Insurance Scheme for individuals whose cause of death included

‘Martyr Operation’. . . .” Id. at 48 (quoting Halberstam, 705 F.2d at 487) (internal citation

omitted). The Miller court found that this allegation “strongly suggests that [the defendant-bank]

was generally aware of the nature of the conduct it was supporting.” Id. Here, Plaintiffs do not

allege that Commerzbank administered or oversaw any special program or fund, the purpose of

which was clearly tied to terrorist activity, so as to permit a plausible inference that Commerzbank

was “generally aware” that through its conduct “it [was] itself assuming a role in terrorist

activities.” Siegel, 933 F.3d at 224.

out acts of terrorism. The most that can be plausibly inferred from the Complaints’ non-conclusory

allegations is that Defendants assisted the Iranian entities in violating U.S. sanctions, despite

knowing or having reason to believe that these entities provided some financial support to

Hezbollah and other terrorist organizations for purposes of committing terrorist acts in Iraq during

the relevant time frame. These allegations are not enough to satisfy Halberstam’s awareness

requirement. See Siegel, 933 F.3d at 224 (finding second Halberstam element not established

where plaintiffs “failed to allege that HSBC was aware that by providing banking services to ARB,

it was supporting AQI, much less assuming a role in AQI’s violent activities”); O’Sullivan, 2020

WL 906153, at *6 (denying leave to amend complaint to plead JASTA aiding and abetting claim,

where proposed amended complaint “proffers no facts from which the Court can infer that

Defendants knowingly played a role in the terrorist activities that injured Plaintiffs”); Honickman,

2020 WL 224552, at *7–10 (finding that the plaintiffs did not meet the “general awareness

element” of the second Halberstam prong as they did not allege that the defendant bank knew it

was assuming a role in Hamas’s terrorist activities at the time assistance was provided); Weiss,

381 F. Supp. 3d at 239 (“Plaintiffs present no evidence that creates a jury question as to whether

Defendant generally was aware that it played a role in any of Hamas’s or even Interpal’s or the

Union of Good’s violent or life-endangering activities.”).

Thus, the Court finds that the Complaints fail to adequately allege the second Halberstam

element for an aiding and abetting claim under JASTA.

2. Knowingly and Substantially Assisting the Principal Violation

Plaintiffs’ theory of how Defendants “knowingly and substantially assisted” in the

commission of the terrorist activities is essentially premised on the same facts alleged in support

of Defendants’ conspiracy claims in Freeman I and the Complaints: beginning in 1984, after Iran

was first designated by the United States as a State Sponsor of Terrorism (Bowman, No. 19-CV-

2146, Am. Compl., Dkt. 21, ¶ 497), Iran developed a myriad of ways to circumvent United States

sanctions and obtain United States dollars (id. at 498); Defendants helped various Iranian entities

evade sanctions by “alter[ing], falsify[ing], or omit[ting] information” for Iranian banks, like Bank

Saderat and IRISL, to conceal Iran’s financial transactions from the Eurodollar market (see, e.g.,

id. at 499, 504–05); Iran then used that money for “illicit objectives,” which included concealing

money from United States institutions, transferring money to the IRGC-QF, Hezbollah, and other

instruments of terrorism, and acquiring technology and components for its “illegal Weapons of

Mass Destruction program and illicit conventional arms trade” (id.); Defendants’ conduct

substantially helped Iran, the IRGC, IRISL, Mahan Air, Hezbollah, and/or the Special Groups in

committing the acts of international terrorism by using United States dollars to fund Iran’s arming,

training, and funding of them (id. at 520); and the terrorist attacks were a foreseeable consequence

of Defendants’ alleged laundering scheme on behalf of Iran, a state sponsor of terrorism. (See,

e.g. Freeman II, No. 18-CV-7359, Am. Compl., Dkt. 72, at ¶¶ 7, 40, 62–74, 163, 498, 836, 989,

3615–28, 3643–46, 3665, 3678–80, 3688, 3698, 3718, 3733, 3755, 3764; see also id. ¶¶ 245–311

(describing Iran’s terror apparatus).)

Based on the same precedent and for many of the same reasons discussed above, these

allegations are simply insufficient to satisfy the “knowing” and “substantial” requirements of the

third element of Halberstam. See, e.g., Siegel, 933 F.3d at 225–26 (finding allegations that HSBC

helped ARB violate banking regulations, knowing that ARB supported terrorist organizations,

“even were that proven, however, it would be an insufficient basis for liability under JASTA

because the plaintiffs have failed to allege that HSBC knowingly assumed a rule in AQI’s terrorist

activities or substantially assisted AQI in those activities”) (emphasis added). With regard to

Defendants’ knowledge, as the court held in Brill v. Chevron Corp., “at most, [the Complaints]

allege[] that [Defendants] should have known that [they were] contributing to terrorism and chose

to ignore the possible consequences. That is in effect an allegation of recklessness,

but JASTA requires more.” No. 15-CV-4916 (JD), 2018 WL 3861659, at *3 (N.D. Cal. Aug. 14,

2018) (internal citations omitted)); see Honickman, 2020 WL 224552, at *11 (finding “knowing”

prong of Halberstam’s third element unmet where, inter alia, “none of the factual allegations in

Plaintiffs’ complaint suggest that BLOM knowingly encouraged Hamas’ violent activities, such

as those which caused Plaintiffs’ injuries”); see also Averbach v. Cairo Amman Bank, No. 19-CV-

4 (GHW) (KHW), 2020 WL 486860, at *12–17 (S.D.N.Y. Jan. 21, 2020) (noting, in a report and

recommendation on a motion to dismiss, that a “trend in JASTA case law toward disallowing

claims against defendants who did not deal directly with a terrorist organization or its proxy,” and

recommending the finding that plaintiffs did not plead sufficient facts to support a JASTA aiding

and abetting claim with respect to the first and second prongs of Halberstam).

The Complaints are also insufficient, based on the six Linde factors to satisfy the

“substantial” aspect of the third Halberstam factor. Linde, 882 F.3d at 329; see Siegel, 933 F.3d

at 225 (analyzing Linde factors). First, “the nature of the act encouraged,” Siegel, 933 F.3d at 225,

by Defendants, as alleged in the Complaints, was violating U.S. sanctions, not committing acts of

terrorism. See id. (finding that plaintiffs did not plausibly allege “that HSBC encouraged the

heinous November 9 Attacks or provided any funds to AQI,” and also finding that, despite alleging

that “HSBC provided hundreds of millions of dollars to ARB, . . . [Plaintiffs] did not advance any

non-conclusory allegation that AQI received any of those funds or that HSBC knew or intended

that AQI would receive the funds”); Honickman, 2020 WL 224552, at *11 (finding that “Plaintiffs

have not plausibly alleged that BLOM encouraged the attacks which injured Plaintiffs or

knowingly provided funds to Hamas for its violent activities”). Second, “the amount of assistance

given by [D]efendant[s],” Linde, 882 F.3d at 329, though involving substantial amounts of money,

was not given to the organizations or individuals who committed the acts of terrorism that injured

Plaintiffs. See Honickman, 2020 WL 224552, at *11 (finding that “Plaintiffs make no non-

conclusory assertions that any of the funds processed by the [three Hamas-affiliated organizations

that banked with BLOM] actually went to Hamas, or that BLOM, at the time it provided banking

services to [the three organizations], was aware or intended that Hamas would receive the

corresponding funds” (citing Siegel, 933 F.3d at 225)). Third, Defendants plainly were not

“presen[t] . . . at the time of the tort,” Linde, 882 F.3d at 329, i.e., the terrorist acts in Iraq between

2004 and 2011. See Siegel, 933 F.3d at 225 (noting that plaintiffs themselves alleged that HSBC

was not “present” at the time of the November 9 terrorist attacks); Honickman, 2020 WL 224552,

at *11 (finding no presence, “[e]ven if the term ‘presence’ could be broadly interpreted” (quoting

Siegel, 933 F.3d at 225)). Fourth, Defendants are not alleged to have any “relation[ship] to the

principal,” Linde, 882 F.3d at 329, i.e., Hezbollah. See Siegel, 933 F.3d at 225 (finding that

“plaintiffs do not plead any non-conclusory allegations that HSBC had any relationship with

AQI”); Honickman, 2020 WL 224552, at *11 (finding no relationship between BLOM and

Hamas). Fifth, the Complaints do not plausibly allege that Defendants’ “state of mind,” Linde,

882 F.3d at 329, involved an intent to finance or otherwise promote or carry out terrorist acts; if

anything, the Complaints’ non-conclusory allegations show that Defendants’ intentions were to

profit commercially by assisting the Iranian entities to evade U.S. sanctions. See Freeman I, 413

F. Supp. 3d at 92 (noting that based on its review of the operative complaint, the Court could only

infer that “Defendants ‘appear’ to have been purely motivated by the opportunity to make

money”); id. at 88 (“Even assuming Defendants knew of Iran’s myriad ties to, and history of,

supporting terrorist organizations, including Hezbollah, the Court cannot infer from this fact that

Defendants agreed to provide illegal financial services to Iranian financial and commercial entities,

which have many legitimate interests and functions, with the intent that those services would

ultimately benefit a terrorist organization.”); see also Siegel, 933 F.3d at 225 (finding that

“plaintiffs do not plausibly allege that HSBC knowingly assumed a role in AQI’s terrorist activities

or otherwise knowingly or intentionally supported AQI”); Honickman, 2020 WL 224552, at *11

(finding that “Plaintiffs make no non-conclusory allegations that BLOM knowingly assumed a

role in Hamas’ terrorist activities or otherwise knowingly or intentionally supported Hamas”).

Finally, although “the period of [Defendants’] assistance,” Linde, 882 F.3d at 329, was lengthy, as

previously noted, there are no allegations that Defendants provided any services to, or had any

dealings with, the “principal,” Hezbollah. See Siegel, 933 F.3d at 225 (observing that HSBC’s 25

years of providing banking services to ARB “certainly bespeaks a lengthy relationship but not

necessarily of assistance in terrorism”).

The closest Plaintiffs come to asserting an aiding and abetting claim are their allegations

pertaining to SCB. Plaintiffs contend that SCB worked directly with Iran to evade sanctions (see,

e.g., Bowman, No. 19-CV-2146, Am. Compl., Dkt. 21, ¶¶ 785–88 (describing SCB’s actions to act

as the recipient bank for U.S. dollar proceeds from daily oil sales made by the NIOC in the

Eurodollar market)) and avoid United States authorities (see, e.g., id. ¶¶ 797–833 (outlining SCB’s

central role in hiding money from United States authorities)). Plaintiffs allege that SCB was the

negotiating bank on many illegal Iranian transactions for Mahan Air and MODAFL sub-agencies

(id. ¶ 1027), and include flow-charts demonstrating how Mahan Air and MODAFL purchased

aircraft parts (id. at 117–18). However, even these allegations fall far short of establishing that

Defendants “knowingly and substantially assist[ed] the principal violation, i.e., the alleged acts of

terrorism. Siegel, 933 F.3d at 223.

Thus, the Court finds that the Complaints fail to “adequately [] plead the ‘substantial

assistance’ element of aiding-and-abetting liability under JASTA.” Id.

* * *

For these reasons, the Court dismisses Plaintiffs’ aiding and abetting counts in Freeman II

and Bowman for failure to state a claim upon which relief can be granted.

CONCLUSION

For the reasons contained herein, the Court dismisses the First, Second, Third, Fourth,

Fifth, Seventh, Eighth, Ninth, Tenth, and Twelfth Claims for Relief,15 as asserted against the

moving Defendants, in Freeman II and Bowman, for failing to state a claim under FRCP 12(b)(6).

The Court also dismisses the Sixth Claim of Relief of both Complaints, brought against Defendant

Commerzbank, for lack of personal jurisdiction pursuant to FRCP 12(b)(2). Lastly, the Court

directs Plaintiffs to move for a certificate of default as to Defendant Bank Saderat PLC in Bowman

(No. 19-CV-2146) within seven (7) days of this Memorandum & Order.

SO ORDERED.

/s/ Pamela K. Chen

Pamela K. Chen

United States District Judge

Dated: June 5, 2020

Brooklyn, New York

15 The Eleventh Claim of the Complaints is asserted only as to Bank Saderat, which, as

previously discussed, despite appearing in Freeman I, has defaulted in Freeman II and Bowman.