The opinion
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
No. 01-7101 September Term, 2002
Filed On: October 17, 2002
Stephen M. Flatow,
Individually and as Administrator of the
Estate of Alisa Michelle Flatow, deceased,
Appellant
v.
Islamic Republic of Iran,
The Ministry of Foreign Affairs, et al.,
Appellees
Consolidated with
No. 01-7149
Appeals from the United States District Court
for the District of Columbia
(No. 97cv00396)
Before: Edwards, Henderson, and Rogers, Circuit Judges.
O R D E R
It is ORDERED, by the Court, sua sponte, that the
opinion filed herein on October 8, 2002 is amended as follows:
On page 2, revise the last sentence of the first paragraph to
read:
We affirm the district court's interpretation ... and the
order limiting the subpoena and the corresponding protective
order.
On page 8, add a footnote at the end of the first full
paragraph to read:
The district court also issued a protective order that Flatow
does not challenge, requesting only that the scope of the
order be coextensive with the scope of relinquishment of
attachment rights under the Victims Act s 2002. Appellant's
Br. At 6, 34.
On page 11, revise the last sentence of the last paragraph
to read:
We affirm the district court's interpretation of "regulated"
Iranian property under IEEPA and the order limiting the
subpoena to this legal interpretation and the corresponding
protective order.
Per Curiam
FOR THE COURT:
Mark J. Langer, Clerk
BY:
Michael C. McGrail
Deputy Clerk
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 6, 2002 Decided October 8, 2002
No. 01-7101
Stephen M. Flatow,
Individually and as Administrator of the
Estate of Alisa Michelle Flatow, deceased,
Appellant
v.
Islamic Republic of Iran,
The Ministry of Foreign Affairs, et al.,
Appellees
Consolidated with
No. 01-7149
Appeals from the United States District Court
for the District of Columbia
(No. 97cv00396)
Steven R. Perles argued the cause for appellant. With him
on the brief was Thomas Fortune Fay.
H. Thomas Byron III, Attorney, U.S. Department of Jus-
tice, argued the cause for appellee United States. With him
on the brief were Roscoe C. Howard, Jr., U.S. Attorney, and
Douglas Letter, Litigation Counsel, U.S. Department of Jus-
tice.
Before: Edwards, Henderson, and Rogers, Circuit Judges.
Opinion for the Court filed by Circuit Judge Rogers.
Rogers, Circuit Judge: This is an appeal from an order
denying a motion to compel payment of post-judgment inter-
est by the United States Treasury Department, and narrow-
ing the scope of a third-party subpoena under Federal Rule
of Civil Procedure 45. See Flatow v. Islamic Republic of
Iran, 196 F.R.D. 203 (D.D.C. 2000). We dismiss the appeal of
the claim for post-judgment interest for lack of jurisdiction,
and vacate the district court's opinion on that issue, because
the district court lacked jurisdiction to entertain a claim
against a nonparty. We affirm the district court's interpreta-
tion of "regulated" Iranian property under the International
Emergency Economic Powers Act ("IEEPA"), 50 U.S.C.
ss 1701-02, and the order limiting the subpoena and the
corresponding protective order.
I.
Stephen M. Flatow obtained a default judgment for more
than $225 million in compensatory and punitive damages
awards in a tort action that he filed against the government of
Iran and several of its officials pursuant to the Foreign
Sovereign Immunities Act ("FSIA"), 28 U.S.C. s 1605(a)(7).
See Flatow v. Islamic Republic of Iran, 999 F. Supp. 1, 5
(D.D.C. 1998). Flatow's attempts to collect the judgment
were unsuccessful.1 Subsequently, on October 28, 2000, the
Victims of Trafficking and Violence Protection Act of 2000,
Pub. L. No. 106-386, 114 Stat. 1464 (2000) ("Victims Protec-
__________
1 See Flatow v. Islamic Republic of Iran, 76 F. Supp. 2d 28
(D.D.C. 1999); Flatow v. Islamic Republic of Iran, 76 F. Supp. 2d
16 (D.D.C. 1999); Flatow v. Islamic Republic of Iran, 74 F. Supp.
2d 18 (D.D.C. 1999).
tion Act") became law, affording certain victims of terrorists'
acts an opportunity to recover funds from the United States
to satisfy their outstanding judgments.2 One month later, on
November 28, 2000, Flatow applied for such funds, electing
100% recovery of the amount of compensatory damages
plus post-judgment interest. See Victims Protection Act,
s 2002(a)(1)(B). His application was approved, and on Janu-
ary 4, 2001, the Treasury Department transferred to Flatow
more than $26 million, representing the compensatory dam-
ages award and post-judgment interest on that portion of the
judgment. As a condition of receiving funds from the United
States, Flatow was required under s 2002(a)(2)(D) of the
Victims Protection Act to relinquish "all rights to execute
against or attach property that is ... subject to section
1610(f)(1)(A) of title 28, United States Code."3
__________
2 The Victims Protection Act offered two options for payment.
As relevant here, s 2002(a)(1) of the statute provides:
Subject to subsections (b) and (c), the Secretary of the
Treasury shall pay each person described in paragraph (2), at
the person's election--
(A) 110 percent of compensatory damages awarded by judg-
ment of a court on a claim or claims brought by the person
under section 1605(a)(7) of title 28, United States Code, plus
amounts necessary to pay post-judgment interest under section
1961 of such title ... [or]
(B) 100 percent of the compensatory damages awarded by
judgment of a court on a claim or claims brought by the person
under section 1605(a)(7) of title 28, United States Code, plus
amounts necessary to pay post-judgment interest, as provided
in section 1961 of such title....
Section 2002(a)(2)(C) provides that a person electing to receive
payment for 110% of compensatory damages, "relinquishes all
rights and claims to punitive damages awarded in connection with
such claim or claims."
3 Section 2002(a)(2)(D) provides that a person receiving pay-
ment for 100% of compensatory damages,
relinquishes all rights to execute against or attach property
that is at issue in claims against the United States before an
Both the scope of Flatow's election of payment and the
scope of his relinquishment of the right to attach Iranian
assets are at issue. Flatow contends that the district court
erred in interpreting the Victims Protection Act first, by
denying his motion to compel payment of post-judgment
interest on the punitive damages award, which we address in
Part II, and second, by narrowing his subpoena because he
would be unable to attach Iranian property that is regulated
by the United States, which we address in Part III.
II.
Flatow contends that the district court ignored the plain
language of s 2002(a)(1)(B) of the Victims Protection Act in
denying his motion to compel the Treasury Department to
pay post-judgment interest on his punitive damages award.
__________
international tribunal, that is the subject of awards rendered by
such tribunal, or that is subject to section 1610(f)(1)(A) of title
28, United States Code.
By Notice published in the Federal Register on November 22,
2000 to "Persons Who Hold Certain Categories of Judgments
Against Cuba or Iran," the Office of Foreign Assets Control in the
Treasury Department ("OFAC") explained that an applicant who
elects the 100% option is barred from seeking to attach "virtually all
Iranian ... assets within the jurisdiction of the United States." 65
Fed. Reg. 70382, 70384. The Notice stated that the Victims Protec-
tion Act required relinquishment of rights to attach or execute
against property subject to 28 U.S.C. s 1610(f)(1)(A), which "applies
to 'any property with respect to which financial transactions are
prohibited or regulated pursuant to ... the International Emergen-
cy Economic Powers Act (50 U.S.C. 1701-1702) (IEEPA), or any
other proclamation, order, regulation, or license issued pursuant
thereto.' " Id. (quoting 28 U.S.C. s 1610(f)(1)(A)). The Notice
explained, as well, the comprehensive sanctions programs against
Iran under IEEPA, such that "virtually every transaction involving
Iranian ... property within the jurisdiction of the United States is
either 'prohibited' or 'regulated,' i.e., permitted only by a general
license in regulations promulgated by" OFAC, or by a "specific
license issued by OFAC." Id.
We do not reach the merits of this contention for lack of
jurisdiction.
The United States filed a Statement of Interest in the
district court on July 23, 1998, in light of Flatow's writs of
attachment on three parcels of real estate in the District of
Columbia that were diplomatic properties of Iran and that
had been held in the custody of the State Department since
1980. The Statement explained that it was submitted solely
to protect the United States' interests and to advise the court
of its legal obligations with respect to the writs under United
States law and international agreements. For example, the
Statement argued that the rental of diplomatic residences did
not make them commercial properties, and that s 1610(b) is
inapplicable because Flatow is seeking attachment of "proper-
ty in the United States of a foreign state," which is defined in
s 1610(a). The Statement sought vacation of the attachments
and quashing of the accompanying writs.4 The Statement
further stated that the United States was not appearing on
behalf of Iran and "expressly condemns the acts that brought
about the judgment in this case."
In response, Flatow filed a motion to compel payment by
the Treasury Department of post-judgment interest on the
punitive damages portion of his judgment against Iran. The
United States, in turn, argued that Flatow could not convert
litigation regarding his Rule 45 subpoena into a proceeding
involving an unrelated claim for monetary relief under
s 2002(2) of the Victims Protection Act against a non-party,
__________
4 The Statement of Interest asserted that the three properties
are (1) immune from attachment under the Foreign Missions Act,
22 U.S.C. ss 4301-4316, and the FSIA, 28 U.S.C. ss 1602-1611; (2)
"blocked" under Executive Order 12170, 44 Fed. Reg. 65729 (Nov.
15, 1979), issued pursuant to IEEPA, 50 U.S.C. ss 1701-1706; (3)
subject to ongoing proceedings between Iran and the United States
in the Iran-U.S. Claims Tribunal; and (4) that attachment would
interfere with the ability of the United States to discharge its
obligations under the Vienna Convention on Diplomatic Relations,
T.I.A.S. No. 7502, 23 U.S.T. 3227 (1964), and jeopardize important
foreign policy interests of the United States.
and alternatively, that the United States had not waived its
sovereign immunity to suits of this sort in the district court.
The district court did not address the United States' objec-
tion to its jurisdiction, ruling instead that Flatow had waived
his right to recover interest on his punitive damages award.
Flatow v. Islamic Republic of Iran, 201 F.R.D. 5, 11 (D.D.C.
2001). This was error because the court lacked jurisdiction to
hear or decide the merits of Flatow's motion to compel a
nonparty.
"The principle that courts lacking jurisdiction over litigants
cannot adjudicate their rights is elementary...." In re
Sealed Case, 141 F.3d 337, 341 (D.C. Cir. 1998). The Federal
Rules of Civil Procedure provide that "[t]here shall be one
form of action to be known as 'civil action' " and such an
action shall be commenced by filing a complaint with the
court, with related service, answer, and motions obligations
thereafter. See Fed. R. Civ. P. 2, 3, 4, 7(a); see also 1
Moore's Federal Practice ss 3.02[2], 3-7 (3d ed. 2000).
Under Federal Rule of Civil Procedure 10(a), the names of all
parties must appear in the complaint filed in the district
court. As in Peralta v. U.S. Attorney's Office, 136 F.3d 169
(D.C. Cir. 1998), "the district court lost track of the identity of
the 'defendant' in this litigation." Id. at 171.
Flatow never named the United States or any agency or
officer of the federal government as a defendant in his tort
action against Iran under the FSIA. He does not claim to
have served the United States or the Treasury Department
with a summons, much less to have made a demand on the
Treasury Department for post-judgment interest on his puni-
tive damages award prior to filing his motion to compel
payment. Nor did Flatow amend his complaint to add the
United States as a party, and the district court docket does
not indicate that the United States was added as a party
through joinder or intervention.
Furthermore, even if the filing of the Statement were
viewed as an appearance by the United States, see 28 U.S.C.
s 517,5 it clearly was a limited appearance, focusing on the
attachments and not the merits of the underlying tort action.
In addition, the United States presented a jurisdictional
objection to Flatow's motion to compel. See Fed. R. Civ. P.
12(b); see also Chase v. Pan-Pacific Broad. Inc., 750 F.2d
131 (D.C. Cir. 1984). Cf. Land v. Dollar, 188 F.2d 629, 632
(D.C. Cir. 1951). Neither could the filing of the Statement of
Interest suffice to make the United States a de facto interve-
nor, assuming the validity of that concept, for the United
States was not present throughout every stage of the pro-
ceedings, its interests were not synonymous with those of the
named Iranian defendants, and it did not behave as a party in
the district court. See Peralta, 136 F.3d at 174. Under the
circumstances, the United States took no action that subject-
ed it to the general jurisdiction of the district court. See Dry
Clime Lamp Corp. v. Edwards, 389 F.2d 590, 596-97 (5th Cir.
1968); McQuillen v. Nat'l Cash Register Co., 112 F.2d 877,
881-82 (4th Cir. 1940); Salmon Falls Mfg. Co. v. Midland
Tire & Rubber Co., 285 F. 214, 217-18 (6th Cir. 1922); Grable
v. Killits, 282 F. 185, 194 (6th Cir. 1922).
Consequently, the Rule 45 subpoena modification proceed-
ing could not provide a substitute for a properly initiated civil
action seeking particular relief, as authorized by statute. The
district court, therefore, was without jurisdiction to hear or
decide the question raised by Flatow's motion, and the dis-
trict court's opinion on the merits of his claim should be
vacated.
III.
On June 5, 1998, Flatow served a third-party subpoena on
the Treasury Department, pursuant to Federal Rule of Civil
Procedure 45, to produce "[a]ll documents of any type or
description pertaining to any assets which any of the named
defendants ... have or ever had or ... asserted or alleged
__________
5 Under 28 U.S.C. s 517, the United States may appear in any
court of the United States "to attend to the interests of the United
States in a suit pending in a court of the United States, or in a court
of a State, or to attend to any other interest of the United States."
any interest, claim, ownership right or security interest" in as
well as assets in the custody or control of the defendants, or
that constituted " 'blocked assets' of the ... defendants."
Although the Department objected that the subpoena was
overly broad and unduly burdensome, the district court large-
ly rejected that challenge and ordered the Department to
comply with the subpoena. See Flatow, 196 F.R.D. 203. In
early 2001, however, the Department moved for modification
of the subpoena based on Flatow's relinquishment of certain
attachment rights under s 2002(a)(2)(D) of the Victims Pro-
tection Act, and also requested that certain offices within the
Department be protected against further discovery under the
subpoena.
The district court ruled that the subpoena was overbroad in
violation of Rule 45. See Flatow, 201 F.R.D. at 8. The court
reasoned that because Flatow relinquished his right to exe-
cute or attach various types of Iranian property under his
s 2002(a)(1)(B) election, information about such property was
irrelevant to his goal of collecting punitive damages. Id.
The court rejected Flatow's argument that the Department
had a mandatory duty to assist the court in locating Iranian
assets under s 1610(f)(2)(A) (as amended by s 2002(f) of the
Victims Protection Act) because s 2002(a)(2)(D) of the Vic-
tims Protection Act prohibited Flatow from attaching some of
those very assets. Id. at 9. The court also rejected Flatow's
argument that the property enumerated in s 2002(a)(2)(D)
does not include Iranian commercial property or property not
within the custodial control of the United States. Id. The
court accordingly modified the subpoena, quoting
s 2002(a)(2)(D), so as not to require the production of infor-
mation relating to "property that is at issue in claims against
the United States before an international tribunal, that is the
subject of awards rendered by such tribunal, or that is
subject to section 1610(f)(1)(A) of Title 28, United States
Code." Id.6
In his brief Flatow contends that the district court incor-
rectly interpreted the scope of his relinquishment of attach-
ment rights under the Victims Protection Act to include
Iranian commercial assets within the United States that are
outside the custodial control of the Treasury Department and
____________
6 The district court also issued a protective order that Flatow does
not challenge, requesting only that the scope of the order be coextensive
with the scope of relinquishment of attachment rights under the Victims
Act s 2002. Appellant's Br. at 6, 34.
of no governmental interest to the United States. He main-
tains that the district court's interpretation destroys Con-
gress's intent to provide claimants a meaningful chance to
satisfy punitive damage awards. Specifically, Flatow con-
tends that his relinquishment of attachment rights did not
destroy his right to attach two categories of Iranian
government-controlled commercial property: (1) assets that
may not leave the United States without a license, over which
Iran continues to enjoy unregulated, domestic, commercial
control, and (2) assets within the pre-approved exceptions to
the federal blocking program.
At oral argument, however, the parties clarified that the
sole legal issue presented with regard to the subpoena is
whether Flatow's election under s 2002(a)(2)(D) of the Vic-
tims Protection Act required a relinquishment of Iranian
property that is licensed by the federal government. On de
novo review, see In re Sealed Case, 146 F.3d 881, 883 (D.C.
Cir. 1998), we hold that the district court properly interpreted
"regulated" Iranian property under the IEEPA and appropri-
ately limited the scope of the subpoena pursuant to that
interpretation. Because Flatow has conceded that the scope
of the subpoena is not otherwise at issue, we need not address
any abuse of discretion challenges to the district court's
order.
The district court's modification of the subpoena repeats
the language of s 2002(a)(2)(D) of the Victims Protection Act,
which refers to 28 U.S.C. s 1610(f)(1)(A). Section
1610(f)(1)(A) provides that:
Notwithstanding any other provision of law ... and
except as provided in subparagraph (B), any property
with respect to which financial transactions are prohibit-
ed or regulated pursuant to section 5(b) of the Trading
with the Enemy Act (50 U.S.C. App 5(b)), section 620(a)
of the Foreign Assistance Act of 1961 (22 U.S.C.
s 2370(a)), sections 202 and 203 of the International
Emergency Economic Powers Act (50 U.S.C. 1701-1702),
or any other proclamation, order, regulation, or license
issued pursuant thereto, shall be subject to execution or
attachment in aid of execution of any judgment relating
to a claim for which a foreign state ... claiming such
property is not immune under section 1605(a)(7).
28 U.S.C. s 1610(f)(1)(A) (emphasis added).
The scope of Flatow's relinquishment of attachment rights
pursuant to s 1610(f)(1)(A) turns then on the meaning of the
phrase "transactions [that] are prohibited or regulated" under
IEEPA. A brief discussion of regulations promulgated pur-
suant to IEEPA makes clear that the district court properly
narrowed the subpoena to exclude Iranian property subject to
license by the federal government.
Acting pursuant to IEEPA's national emergency powers,
President Carter, in response to the Iranian hostage crisis,
declared a national emergency on November 14, 1979, and
issued a series of Executive Orders that, among other things,
blocked the removal or transfer of all Iranian property sub-
ject to U.S. jurisdiction. See Dames & Moore v. Regan, 453
U.S. 654, 663 (1981). The President authorized the Treasury
Department to promulgate regulations carrying out the block-
ing order. Id. Consequently, the Department's Office of
Foreign Asset Control ("OFAC") administers two regulatory
programs involving Iranian property: the Iranian Assets
Control Regulations ("IACR") and the Iranian Transactions
Regulations ("ITR"). See 31 C.F.R. Pts. 530, 560 (1980).
The IACR broadly prohibits unauthorized transactions involv-
ing property in which Iran has any interest. 31 C.F.R.
s 535.201. Such property may not be transferred, paid,
exported, withdrawn, or otherwise dealt in except as provided
by OFAC. Id. Unless authorized by a license issued by
OFAC, any transaction within the terms of the IACR is
prohibited. 31 C.F.R. s 535.101. Pursuant to the Algiers
Accords, the Treasury Department established a general
license that authorized post-1981 transactions "in which Iran
or an Iranian entity has an interest." 31 C.F.R. s 535.579.
The second regulatory program, the ITR, confirms the broad
reach of OFAC's Iranian sanctions programs by establishing
controls on Iranian trade, investments, and services. See 31
C.F.R. Pt. 560. However, the ITR does not apply to certain
categories of transactions, such as personal communications,
donations of particular humanitarian articles, and informa-
tional materials. 50 U.S.C. s 1702(b); 31 C.F.R. s 560.210.
As under the IACR, there is a general prohibition under the
ITR of unauthorized transactions, coupled with specific licens-
es permitting certain kinds of transactions. 31 C.F.R.
ss 560.505-560.535.
The fact that a transaction is authorized by an OFAC
license confirms that it is "regulated" by IEEPA and by
regulations or licenses issued pursuant thereto. Cf. Regan v.
Wald, 468 U.S. 222, 233-34 (1984). By the plain terms of the
Treasury Department's regulations, the IACR establishes
that virtually all property subject to the jurisdiction of the
United States in which Iran has any interest is either prohib-
ited or subject to a license of the United States. 31 C.F.R.
s 535.101. Flatow's contention that the district court should
have held that the government was collaterally estopped from
claiming in its Notice of November 22, 2000, supra note 3,
that he cannot attach licensed Iranian property was first
raised in his reply brief, and thus we do not address it. See,
e.g., Steel Joist Inst. v. OSHA, 287 F.3d 1165, 1166 (D.C. Cir.
2002).
Accordingly, we dismiss Flatow's contention that he is
entitled to post-judgment interest on his punitive damages
award for lack of jurisdiction and vacate the district court's
opinion on that issue. We affirm the district court's interpre-
tation of "regulated" Iranian property under IEEPA and the
order limiting the subpoena to this legal interpretation and the
corresponding protective order.