Brown v. National Bank of Pakistan

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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:

HAROLD BROWN, Sr. et al., :

: ORDER DISMISSING

Plaintiffs, : COMPLAINT

-against- :

: 19 Civ. 11876 (AKH)

NATIONAL BANK OF PAKISTAN, :

:

Defendant. :

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ALVIN K. HELLERSTEIN, U.S.D.J.:

Defendant National Bank of Pakistan (“NBP”) brings this motion to dismiss for lack of

subject matter jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§

1330(a), 1604, lack of personal jurisdiction, and failure to state a legally sufficient claim for

relief. Def. Mot., ECF No. 16. I hold that there is both subject matter and personal jurisdiction,

but that the complaint should be dismissed for gross violation of the requirements of federal

pleading, with leave to replead consistent with this Order.

The complaint of 841 allegations, extending over 250 pages, states a claim against

Defendant for aiding and abetting, conspiracy, and providing material support to terrorist

organizations. Plaintiff alleges that Defendant provided financial support and banking services

to several notorious terrorist groups and terrorist fundraisers, among them, al-Qaeda. Plaintiff

alleges that NBP raised funds by “using its New York branch to convert the donations they

received from outside Pakistan into U.S. dollars”, which NBP then routed to terrorist syndicates.

Id. ¶ 305. Plaintiff alleges that Hafiz Khan, a terrorist operative, deposited funds with an NBP

branch in the United States and in the process, communicated with U.S.-based employees of the

bank. Plaintiff also alleges that NBP’s New York branch played an essential role in scrutinizing

transactions with the terrorist operatives, and knowingly ignored red flags and “Red Alerts”

raised to allow the transactions to proceed. Id. ¶ 317.

Under the FSIA, agencies and instrumentalities of a foreign state are “presumptively

immune from the jurisdiction of United States courts; unless a specified exception applies, a

federal court lacks subject-matter jurisdiction over a claim against a foreign state.” Saudi Arabia

v. Nelson, 507 U.S. 349, 355 (1993). An agency or instrumentality is define as any entity “(1)

which is a separate legal person, corporate or otherwise, and (2) which is an organ of a foreign

state or political subdivision thereof, or a majority of whose shares or other ownership interest is

owned by a foreign state or political subdivision thereof, and (3) which is neither a citizen of a

State of the United States . . . nor created under the laws of any third country.” 28 U.S.C. §

1603(b). “[O]nly direct ownership of a majority of shares by the foreign state satisfies the

statutory requirement” of § 1603(b)(2). Dole Food Co. v. Patrickson, 538 U.S. 468, 474 (2003).

75.2% of NBP’s shares are owned by the State Bank of Pakistan which, in turn, is wholly

owned by the Federal Government of Pakistan. Such indirect ownership is insufficient to invoke

FSIA immunity. See Filler v. Hanvit Bank, 378 F.3d 213, 215-16 (2d Cir. 2004) (majority

ownership of a bank by an organ of the Republic of Korea but controlled by the Korean Ministry

of Finance and the Economy of the Republic of Korea constitutes indirect ownership and does

not qualify for immunity under the FSIA).

The exercise of personal jurisdiction over NBP is governed by Fed. R. Civ. P. 4(k)(2),

which requires that the defendant have sufficient contacts with the United States in general.

Siegel v. HSBC Holdings, PLC, No. 17CV6593 (DLC), 2018 WL 501610, at *3 (S.D.N.Y. Jan.

19, 2018). Here, I find that NBP “has purposefully directed [its] activities at the forum and the

litigation arises out of or relates to those activities” and that “assertion of personal jurisdiction is

reasonable under the circumstances.” Id. (citing Gucci America, Inc. v. Weixing Li, 768 F.3d

122, 136 (2d Cir. 2014)). Plaintiff alleges that “[a]ll [of Defendant’s] international transactions

denominated in US Dollars are routed through United States of America.” Am. Compl. ¶ 279.

Additionally, based on his trial testimony, Hafiz Khan held at least two NBP account in the

United States, and that the money “would go into the National Bank of Pakistan in the United

States,” and “then it would go over to Pakistan and someone would take it out at that end.”

Id. ¶ 220. In the course of depositing funds with an NBP branch in the United States, Khan

“communicated with U.S.-based employees of NBP about his transactions. . . [which] relied

completely on NBP’s U.S. branches and personnel.” Id. ¶ 304.

The exercise of personal jurisdiction is also consistent with New York’s long arm statute,

CPLR 302(a)(1) (personal jurisdiction is proper where (1) the defendant “ ‘transacted business

within the state; and (2) the claim asserted ... arise[s] from that business activity’). NBP

maintains a branch in New York, which allegedly converted the donations received from outside

Pakistan into U.S. dollars, and were then withdrawn by terrorist operatives and regularly

delivered to senior Taliban commanders in Afghanistan. Id. ¶ 305. Thus, Plaintiff plausibly

alleges that Defendant’s commercial activities, including transactions cleared through NBP’s

New York branch and the New York branch’s special role in currency exchange, “were the

means by which NBP provided critical assistance to terrorist organizations.” Am. Compl. ¶¶ 27,

303.

Furthermore, the complaint alleges that the New York branch specifically “ignored U.S.

designations that would have stopped the transactions entirely.” Am. Compl. ¶¶ 28, 306.

Plaintiff alleges that NBP’s internal documents state that “NBP New York is playing [a] central

role in providing the services of US Dollar international wire transfers to NBP Head Office and

domestic branches.” Id. ¶ 315. NBP’s New York branch allegedly subjected each transaction to

scrutiny under state and federal law; however, it knowingly ignored “the red flags and ‘Red

Alerts’ these transactions raised.” Id. ¶¶ 315, 317. These plausible allegations of repeated

transactions and involvement monitoring transactions confer personal jurisdiction. See Licci ex

rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161 (2d Cir. 2013) (“the selection and

repeated use of New York’s banking system, as an instrument for accomplishing the alleged

wrongs for which the plaintiffs seek redress, constitutes purposeful availment . . . of the privilege

of doing business in New York”).

Plaintiff’s amended complaint, spanning 250 pages and 841 paragraphs, however, is

inconsistent with Fed. R. Civ. P. 8(a), which requires a short and plain statement of the claim.

The parties’ submissions regarding the instant motion to dismiss and supplemental letters to the

Court total over 200 additional pages, and over 300 pages of exhibits. The complaint is

dismissed with leave to replead consistent with Fed. R. Civ. P. 8(a) by February 16, 2021.

Defendant shall move or answer by March 12, 2021. The parties shall appear for the initial case

management conference on April 2, 2021, at 10 am.

Oral argument, currently scheduled for January 19, 2021, is hereby cancelled. The Clerk

is instructed to terminate the open motions to dismiss the complaint and amended complaint,

ECF Nos. 9, 16.

SO ORDERED.

Dated: January 13, 2021 /s/

New York, New York ALVIN K. HELLERSTEIN

United States District Judge