Valore v. Islamic Republic of Iran

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)

)

IN RE: )

)

ISLAMIC REPUBLIC OF IRAN )

TERRORISM LITIGATION )

) Civil Action Nos.

)

) 01-CV-2094, 01-CV-2684, 02-CV-1811,

) 03-CV-1486, 03-CV-1708, 03-CV-1959,

) 05-CV-2124, 06-CV-473, 06-CV-516,

) 06-CV-596, 06-CV-690, 06-CV-750,

) 06-CV-1116, 07-CV-1302, 08-CV-520,

) 08-CV-531, 08-CV-1273, 08-CV-1615,

) 08 CV-1807, 08-CV-1814

I.

TABLE OF CONTENTS

I. Table of Contents................................................................................................................ 1

II. Introduction......................................................................................................................... 3

III. Discussion. .......................................................................................................................... 9

A. Historical Overview of the FISA State Sponsor of Terrorism Exception as it

Relates to Actions Against the Islamic Republic of Iran...................................... 13

1. The Original State Sponsor of Terrorism Exception to Foreign

Sovereign Immunity, Section 1605(a)(7) and the Flatow Amendment,

Section 1605 Note, and Litigation Against Iran for its Provision of

Material Support to Terrorist Organizations............................................. 14

2. Setbacks for Plaintiffs: The D.C. Circuit’s Decision in Cicippio-Puleo. . 22

3. The Never-Ending Struggle to Enforce Judgments Against Iran. ............ 27

B. Section 1083 of the 2008 NDAA and the Creation of a Terrorism Exception,

Section 1605A....................................................................................................... 44

1. New Federal Cause of Action. .................................................................. 44

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2. Punitive Damages. .................................................................................... 48

3. Compensation for Special Masters. .......................................................... 49

4. More Robust Provisions for the Execution of Civil Judgments. .............. 49

C. Retroactive Application of Section 1605A to Cases Previously Filed Under

Section 1605(a)(7). ............................................................................................... 52

1. Section 1083(c)(2) – Prior Actions. .......................................................... 53

2. Section 1083(c)(3) – Related Actions....................................................... 55

3. The 60-Day Rule – Filing Deadline for Cases Based on Prior Actions

Under Section 1605(a)(7). ........................................................................ 56

4. Section 1083(c)(2)(B) – Defenses Waived: Res Judicata, Collateral

Estoppel, and Statute of Limitations Are Deemed Waived to the Extent

that those Defenses Relate to Claims Litigated in a Prior Action Under

Section 1605(a)(7). ................................................................................... 56

D. Efforts to Obtain Retroactive Treatment Under the New Terrorism Exception,

Section 1605A....................................................................................................... 58

E. Examination of Section 1083(c) of the 2008 NDAA Under Article III of the

United States Constitution. ................................................................................... 62

1. Principles of Law – The Independence of the Federal Judiciary Under

Article III and the Finality of Judgments.................................................. 66

2. Analysis of the Constitutional Question in Light of the Supreme

Court’s Jurisprudence. .............................................................................. 76

a. Does Section 1083(c)(3) Direct the Reopening of Final

Judgments Entered Before its Enactment and Therefore

Contravene Article III as Construed by the Supreme Court in

Plaut? ............................................................................................ 77

b. Assuming that Section 1083(c)(3) Does Not Direct the

Reopening of Final judgments, Does the Waiver of Res

Judicata and Collateral Estoppel Effect of any Prior Terrorism

FSIA Action Nonetheless Offend Article III because Congress

has Directed the Courts to Ignore Fundamental and

Longstanding Judicial Doctrines?................................................. 86

3. Additional Considerations. ....................................................................... 96

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F. Analysis of Whether Actions Under Section 1605(a)(7) Have Qualified for

Retroactive Treatment Under Section 1605A..................................................... 102

1. The Belt-and-Suspenders Plaintiffs: Those Who Have Invoked both

Section 1083(c)(2) and (c)(3).................................................................. 104

2. The Related-Action Plaintiffs: Those Who Have Filed New Actions

Pursuant to Section 1083(c)(3). .............................................................. 115

3. The Do-Nothing Plaintiffs: Those Who Have Invoked Neither Section

1083(c)(2) Nor (c)(3) in Their Efforts to Retroactively Claim the New

Entitlements Under Section 1605A. ....................................................... 119

4. General Guidance for All Cases. ............................................................ 125

G. Service of New Claims in Pending Cases........................................................... 126

H Guidance for Plaintiffs Who May Wish to Pursue Relief Under Rule 60 of the

Federal Rules of Civil Procedure........................................................................ 133

I. Compensation for Special Masters. .................................................................... 137

J. Motions for Appointment of Receivers. ............................................................. 143

K. A Call for Meaningful Reform. .......................................................................... 156

L. An Invitation for the United States to Participate in These Actions................... 186

IV. Conclusion. ..................................................................................................................... 187

II.

INTRODUCTION

For more than a decade now, this Court has presided over what has been a twisting and

turning course of litigation against the Islamic Republic of Iran under the state sponsor of

terrorism exception of the Foreign Sovereign Immunities Act (FSIA). Despite the best intentions

of Congress and moral statements of support from the Executive Branch, the stark reality is that

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the plaintiffs in these actions face continuous road blocks and setbacks in what has been an

increasingly futile exercise to hold Iran accountable for unspeakable acts of terrorist violence.1

The cases against Iran that will be addressed by the Court today involve more than one

thousand individual plaintiffs. Like countless others before them, the plaintiffs in these actions

have demonstrated through competent evidence—including the testimony of several prominent

experts in the field of national security—that Iran has provided material support to terrorist

organizations, like Hezbollah and Hamas, that have orchestrated unconscionable acts of violence

that have killed or injured hundreds of Americans. As a result of these civil actions, Iran faces

more than nine billion dollars in liability in the form of court judgments for money damages.

Despite plaintiffs’ best efforts to execute these court judgments, virtually all have gone

unsatisfied.

This consolidated opinion focuses on recent legislative changes in this extraordinary area

of the law, as implemented by Congress last term in § 1083 of the 2008 National Defense

1

The Islamic Republic of Iran was designated by the Secretary of State as a state sponsor

of terrorism on January 19, 1984. The State Department maintains a list of countries that have

been designated as state sponsors of terrorism on the Department’s website. See U.S. Dep’t of

State, State Sponsors of Terrorism, www.state.gov/s/ct/c14151.htm (last visited Sept. 29, 2009).

As noted at the website, countries designated as state sponsors of terrorism are those countries

that the Secretary of State has determined “have repeatedly provided support for acts of

international terrorism.” Id. The Secretary of State makes that determination and designates

state sponsors of terrorism pursuant to three statutory authorities: § 6(j) of the Export

Administration Act of 1979, 50 U.S.C. app. § 2405(j); § 620A of the Foreign Assistance Act, 22

U.S.C. § 2371; and § 40(d) of the Arms Export Control Act, 22 U.S.C. § 2780(d). Three other

countries are designated as State Sponsors of Terrorism: Cuba, Sudan, and Syria. U.S. Dep’t of

State, supra note 1. In April 2009, the State Department published its annual Country Reports

on Terrorism, reporting that “Iran remained the most active state sponsor of terrorism” in 2008.

U.S. DEP’T OF STATE, COUNTRY REPORTS ON TERRORISM 2008, at 182, available at

http://www.state.gov/documents/organization/122599.pdf. “Iran’s involvement in the planning

of financial support of terrorist attacks throughout the Middle East, Europe, and Central Asia has

had a direct impact on international efforts to promote peace, threatened economic stability in the

Gulf, and undermined the growth of democracy.” Id.

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Appropriations Act for Fiscal Year 2008 (2008 NDAA). See Pub. L. No. 110-181, § 1083, 122

Stat. 3, 338–44. Section 1083 completely repeals the original state sponsor of terrorism

exception—28 U.S.C. § 1605(a)(7)—which was originally enacted in 1996, and enacts in its

place a new exception—28 U.S.C. § 1605A—that is in many ways more favorable to plaintiffs.

This new statute provides, among other reforms, a new federal cause of action against state

sponsors of terrorism and allows for awards of punitive damages in these cases. Even more

significantly, however, the reforms implemented through § 1083 last year add a number of

measures that are intended to help plaintiffs succeed in enforcing court judgments against state

sponsors of terrorism, such as Iran.

The primary purpose of this opinion is to consider whether and to what extent these

recent changes in the law should apply retroactively to a number of civil actions against Iran that

were filed, and, in many instances, litigated to a final judgment prior to the enactment of the

2008 NDAA. In this particular instance, Congress has provided express guidance in § 1083(c)

with respect to how § 1605A may be applied retroactively to reach a host of cases that were filed

under the original terrorism exception, § 1605(a)(7). In considering this retroactivity question,

the Court will address a variety of other legal and procedural issues relating to what may be

another lengthy course of litigation against Iran.

As is often the case in this area of the law that the Supreme Court has called sui generis,

see Austria v. Altmann, 541 U.S. 677, 698 (2004), this Court must sometimes confront novel

legal questions, including constitutional issues of first impression. Today’s decision is no

different. This Court must address whether § 1083(c) impermissibly directs the reopening of

final judgments in violation of Article III of the Constitution. See Plaut v. Spendthrift Farm,

Inc., 514 U.S. 211, 241 (1995). The Court’s attentiveness to this potentially unconstitutional

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application of § 1083(c) was heightened significantly by provisions of § 1083(c) that direct

courts to essentially disregard the firmly established judicial doctrines of res judicata and

collateral estoppel with respect to any matters litigated in a prior FSIA terrorism case.

To the extent that § 1083(c) might be construed as directing the reopening of final

judgments entered under the former version of the terrorism exception, § 1605(a)(7), it would

usurp the prerogative of the judiciary to decide cases under Article III and thereby offend the

principle of separation of powers enshrined within our Constitution. In light of this issue’s

significance with respect to ongoing litigation against Iran, this Court addresses the Article III

question in Part E of this opinion. After careful analysis as set forth below, this Court holds that

the statute withstands constitutional scrutiny.

Today, the Court also reaches an even more fundamental conclusion: Civil litigation

against Iran under the FSIA state sponsor of terrorism exception represents a failed policy. After

more than a decade spent presiding over these difficult cases, this Court now sees that these

cases do not achieve justice for victims, are not sustainable, and threaten to undermine the

President’s foreign policy initiatives during a particularly critical time in our Nation’s history.

The truth is that the prospects for recovery upon judgments entered in these cases are extremely

remote. The amount of Iranian assets currently known to exist with the United States is

approximately 45 million dollars, which is infinitesimal in comparison to the 10 billion dollars in

currently outstanding court judgments.2 Beyond the lack of assets available for execution of

judgments, however, these civil actions inevitably must confront deeply entrenched and

2

See OFFICE OF FOREIGN ASSETS CONTROL, U.S. DEP’T OF THE TREASURY, TERRORIST

ASSETS REPORT 14–15, tbls. 1, 3 (2007) [hereinafter TERRORIST ASSETS REPORT], available at

http://www.treas.gov/offices/enforcement/ofac/reports/tar2007.pdf.

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fundamental understandings of foreign state sovereignty, conflicting multinational treaties and

executive agreements, and the exercise of presidential executive power in an ever-changing and

increasingly complex world of international affairs.

Unfortunately, the enactment of § 1083 of the 2008 NDAA continues and expands the

terrorism exception and its failed policy of civil litigation as the means of redress in these

horrific cases. The availability of new federal claims under § 1605A with punitive damages,

when combined with the broad retroactive reach accorded to this new statute, means that liability

in the form of billions of dollars more in court judgments will continue to mount and mount

quickly.

As a result of these latest reforms, the victims in these cases will now continue in their

long struggle in pursuit of justice through costly and time-consuming civil litigation against Iran.

They will do this at a time in our Nation’s history when the President has taken bold and

unprecedented steps in an attempt to improve relations with that foreign power while pressing

forward on crucial issues, such as the grave threat of nuclear proliferation posed by Iran.

Regrettably, the continuation in § 1083 of the same flawed policy that has failed plaintiffs in

these actions for over a decade may only stoke the flames of unrealistic and unmanageable

expectations in these terrorism victims who so rightly deserve justice, which may in turn serve

only to expose the Administration to an unprecedented burden in its management of United

States foreign policy towards Iran.

In view of these considerations, the Court will respectfully urge the President and

Congress to seek meaningful reforms in this area of law in the form of a viable alternative to

private litigation as the means of redress for the countless deaths and injuries caused by acts of

terrorism. In Part K of the opinion and in the Conclusion, this Court will speak candidly about

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the challenges, complexities, and frustrations borne out by these civil actions over the past

decade in an effort to urge our political leaders to act. If the decade-long history of these FSIA

terrorism actions has revealed anything, it is that the Judiciary cannot resolve the intractable

political dilemmas that frustrate these lawsuits; only Congress and the President can. Today, at

the start of a new presidential administration—one that has sought engagement with Iran on a

host of critical issues—it may be time for our political leaders here in Washington to seek a fresh

approach.3

To assist this Court in these matters going forward, the Court will invite the United States

to participate in these actions by filing a brief in response to the many issues addressed in this

opinion. The Court encourages the United States to express its views regarding this litigation,

but, more importantly, the Court hopes the Government might take this opportunity to give due

consideration to whether there might be a more viable system of redress for these tragic and

difficult cases. With the daunting national security challenges that confront the President with

respect to Iran, our political leaders should candidly acknowledge the challenges and pitfalls of

these terrorism lawsuits. The Court fears that if reforms are not achieved in the near future, these

civil suits against Iran may undermine the President’s ability to act at a time when it matters

most.

3

Reaching out to the people of Iran and their leaders, President Obama recently stated: “I

would like to speak clearly to Iran’s leaders: We have serious differences that have grown over

time. My administration is now committed to diplomacy that addresses the full range of issues

before us and to pursuing constructive ties among the United States, Iran, and the international

community.” Videotaped Remarks on the Observance of Nowruz, DAILY COMP. PRES. DOC.,

Mar. 20, 2009.

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Today’s omnibus opinion consists of twelve parts and is intended to serve a case

management function in light of the significant changes in the law relating to these civil suits

against Iran. Thus, today’s ruling is consistent with this Court’s inherent authority to manage the

docket. See, e.g., In re Fannie Mae Sec. Litig., 552 F.3d. 814, 822 (D.C. Cir. 2009) (“District

judges must have authority to manage their dockets, especially during massive litigation . . . .”).

A separate order consistent with this opinion will issue this date.

III.

DISCUSSION

The Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. §§ 1330, 1602–1611,

is the sole basis of jurisdiction over foreign states in our courts. E.g., Argentine Republic v.

Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989); Prevatt v. Islamic Republic of Iran,

421 F. Supp. 2d 152, 157–58 (D. D.C. 2006) (Lamberth, J.). Enacted in 1976, the FSIA codifies

a restrictive theory of foreign state sovereign immunity by which states are generally immune

from the jurisdiction of courts of the United States, subject to a few carefully delineated

exceptions. See, e.g., Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 488–89 (1983);

Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82, 87 (D.C. Cir. 2002). In the

original FSIA enactment, exceptions to foreign sovereign immunity included cases in which a

foreign state had either expressly or implicitly waived its immunity and cases relating to the

commercial activities of a foreign sovereign within the United States. See Act of Oct. 21, 1976,

Pub. L. No. 94-583, 90 Stat. 2891; see also §§ 1605(a), 1605A (codification of current FSIA

exceptions); Verlinden, 461 U.S. at 488 (discussing key exceptions under the FSIA).

The state sponsor of terrorism exception of the FSIA was first enacted in 1996 as part of

Mandatory Victims Restitution Act of 1996, which was itself part of the larger Antiterrorism and

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Effective Death Penalty Act of 1996. Pub. L. No. 104-132, § 221(a)(1)(C), 110 Stat. 1214, 1241

(formerly codified at § 1605(a)(7)). As noted, however, the original exception at § 1605(a)(7)

was repealed last year by the 2008 NDAA, § 1083(b)(1)(A)(iii), and replaced with a new

exception at § 1605A. It is unclear why Congress chose to repeal rather than simply amend the

prior statute. See H.R. REP. NO. 110-477, at 1001 (2007) (Conf. Rep.) (discussing § 1605A but

omitting discussion of why Congress repealed, instead of amended, § 1605(a)(7)). Perhaps

members of Congress wanted to reinforce the significance of their overhaul of the terrorism

exception. Whatever the case may be, it is important at the outset for this Court to offer some

notes of clarification and historical background information in an effort to avoid any confusion in

the ensuing discussion.

The Court’s analysis today must simultaneously consider two separate and distinct

versions of the terrorism exception of the FSIA—the now-repealed version of the terrorism

exception, § 1605(a)(7), and the new version, § 1605A. While the prior version of the exception,

§ 1605(a)(7), and the new version, § 1605A, differ in many fundamental respects, it is important

to keep in mind that the basic grant of subject matter jurisdiction for actions against state

sponsors of terrorism remains unchanged. Thus, it makes little difference whether one refers to

§ 1605(a)(7) or § 1605A when addressing the degree to which foreign sovereign immunity has

been removed, subjecting designated state sponsors of terrorism to lawsuits in our courts.

Indeed, the language eliminating sovereign immunity in the new exception, § 1605A, is virtually

identical to the operative language in § 1605(a)(7). Compare § 1605(a)(7) with § 1605A(a)(1).

Accordingly, in those instances in which the Court is merely referring to the grant of subject

matter jurisdiction afforded by the virtue of the FSIA’s terrorism exception, it will do so broadly,

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without any additional effort to underscore the two different statutes, as the two provisions are in

fact indistinguishable in terms of the basic jurisdiction conferring language.

While the grant of subject matter jurisdiction for suits against state sponsors of terrorism

is virtually unchanged, the latest version of the terrorism exception, § 1605A, adds substantive

rights and remedies that were not available previously. As noted above, § 1605A is a much more

expansive provision, one which provides a federal cause of action, as well as many other

statutory entitlements. These new rights and remedies are the central focus of today’s decision.

The issue is whether the plaintiffs in actions that were filed, at least initially, under the now-

repealed § 1605(a)(7), can now avail themselves of the additional entitlements associated with

the new exception, § 1605A. Thus, to extent that some of these plaintiffs are unable to claim the

benefits of the new terrorism law retroactively, then the prior exception, § 1605(a)(7)—even

though now repealed—remains viable and indeed is the controlling source of law in their cases.

This is consistent with both the guidance provided by Congress in § 1083(c) of the 2008 NDAA

and the general presumption against the retroactive application of laws. See Landgraf v. USI

Film Prods., 511 U.S. 244, 286 (1994) (“The presumption against statutory retroactivity is

founded upon sound considerations of general policy and practice, and accords with long held

and widely shared expectations about the usual operation of legislation.”). Thus, when dealing

with the nuts and bolts of the retroactivity analysis, especially in Part D below where the Court

looks individually at each of the 20 cases in this opinion, it is important to keep the two versions

of the exception separate and distinct. As underscored recently by the Court of Appeals for this

Circuit, terrorism cases that were filed prior the enactment of the 2008 NDAA, and which do not

qualify for retroactive treatment under the new exception, are governed by the prior statute,

§ 1605(a)(7). See Simon v. Republic of Iraq, 529 F.3d 1187, 1192 (D.C. Cir. 2008), rev’d on

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other grounds sub. nom Republic of Iraq v. Beaty, 129 S. Ct. 2183 (2009); accord Oveissi v.

Islamic Republic of Iran, 573 F.3d 835 (D.C. Cir. 2009); La Reunion Aerienne v. Socialist

People’s Libyan Arab Jamahiriya, 533 F.3d 837, 845 (D.C. Cir. 2008); Owens v. Republic of

Sudan, 531 F.3d 884, 887 (D.C. Cir. 2008).

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A.

HISTORICAL OVERVIEW OF THE FSIA STATE SPONSOR OF TERRORISM

EXCEPTION AS IT RELATES TO ACTIONS AGAINST

THE ISLAMIC REPUBLIC OF IRAN

The new terrorism exception—§ 1605A—clears away a number of legal obstacles,

including adverse court rulings, that have stifled plaintiffs’ efforts to obtain relief in civil actions

against designated state sponsors of terrorism. In fact, these reforms are in part a legislative fix

to certain adverse precedent from the D.C. Circuit because Ҥ 1605A(c) abrogates Cicippio-

Puleo v. Islamic Republic of Iran, 353 F.3d 1024 (D.C. Cir. 2004), by creating a federal right of

action against foreign states, for which punitive damages may be awarded.” Simon, 529 F.3d at

1190. Thus, to fully grasp the significance these latest reforms, it is important to have some

understanding regarding the manner in which the state sponsor of terrorism exception was

shaped over time through the jurisprudence of this Circuit. More fundamentally, however, this

historical backdrop is essential to the Court’s analysis of the Article III separation-of-powers

issue below in Part E, as well as for the Court’s conclusion in Part K that even greater reforms in

the law are necessary.

Accordingly, the Court will now briefly provide a historical overview of the state sponsor

of terrorism exception, as it was originally constituted under § 1605(a)(7) (repealed), and the so-

called Flatow Amendment to that exception, . This part of the discussion will examine some of

the early litigation against Iran before this Court in cases arising out of Iran’s provision of

material support and resources to terrorist organizations, such as Hamas and Hezbollah. The

important historical background that follows breaks down roughly into three parts. The Court

will begin with a discussion of Flatow v. Islamic Republic of Iran, 999 F. Supp. 1 (D.D.C. 1998)

[hereinafter Flatow I] (Lamberth, J.), which was the first case in the country to be decided

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against Iran under the state sponsor of terrorism exception. After discussing this Court’s ruling

in Flatow, this Court will then review the decision of the D.C. Circuit Court of Appeals in

Cicippio-Puleo, 353 F.3d 1024, in which the Court found that neither § 1605(a)(7) nor the

Flatow Amendment furnish a cause of action against a foreign state. This Court examines the

negative consequences and practical implications of that ruling for plaintiffs in these terrorism

cases. After examining the fallout from Cicippio-Puleo, this Court proceeds to address what has

been the greatest problem for these plaintiffs, and that is the fact that there are simply not

sufficient Iranian assets that are amenable to attachment or execution in satisfaction of judgments

entered against Iran under the FSIA terrorism exception.4

1. The Original State Sponsor of Terrorism Exception to Foreign Sovereign Immunity,

Section 1605(a)(7) and the Flatow Amendment, Section 1605 Note, and Litigation

Against Iran for its Provision of Material Support to Terrorist Organizations

The state sponsor of terrorism exception to foreign sovereign immunity applies only to

foreign sovereigns officially designated as state sponsors of terrorism by the State Department.

See § 1605A(a)(2)(A)(i)(I); § 1605(a)(7)(a) (repealed). This exception to foreign sovereign

immunity is commonly known as the “terrorism exception.” See, e.g., Kilburn v. Socialist

4

For an excellent summary of the litigation and evolution of the law pertaining to the

state sponsor of terrorism exception of the FSIA, see JENNIFER K. ELSEA, CONGRESSIONAL

RESEARCH SERV., SUITS AGAINST TERRORIST STATES BY VICTIMS OF TERRORISM (2008)

[hereinafter SUITS AGAINST TERRORIST STATES], available at

http://www.fas.org/sgp/crs/terror/RL31258.pdf. This Congressional Research Service report on

terrorism lawsuits is the logical starting point for anyone who is hoping to gain a solid grasp of

the development of this area of the law and its many complexities. In addition to chronicling

important legislative developments, the report captures and summarizes the civil litigation that

has occurred in this Court against Iran under the state sponsor of terrorism exception to the

FSIA. This Court is grateful to the Congressional Research Service, and to Ms. Elsea in

particular, for their thorough work on this unique and important topic. This Court has examined

and relied on many of the original source materials identified in the report for additional insight

on these matters beyond the Court’s own experience in presiding over dozens of civil actions

against Iran.

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People’s Libyan Arab Jamahiriya, 376 F.3d 1123, 1126 (D.C. Cir. 2004). Under the exception,

foreign sovereign immunity is eliminated in two different categories of terrorism cases: (1) those

in which the designated foreign state is alleged to have committed certain acts of terrorism, i.e.,

torture, extrajudicial killing, aircraft sabotage, or hostage taking; and (2) those in which the

designated state is alleged to have provided “material support or resources” for such terrorist

acts. See § 1605A(a)(1); § 1605(a)(7) (repealed). Thus, a designated state sponsor of terrorism

might be held to account for its specific acts of terrorism, as well as, more broadly speaking, its

“provision of material support or resources” in furtherance of acts of terrorism. See

§ 1605A(a)(1); § 1605(a)(7) (repealed).

The statute is intended to protect American victims of state-sponsored terrorism, and

therefore only United States citizens and nationals may rely on its grant of subject matter

jurisdiction. See § 1605A(a)(1); § 1605(a)(7) (repealed); see also Acosta v. Islamic Republic of

Iran, 574 F. Supp. 2d. 15, 25–26 (D.D.C. 2008) (Lamberth, C.J.) (denying claims of victim,

Rabbi Meir Kahane, who had voluntarily renounced his U.S. citizenship years prior to his

assassination by Islamic terrorists). Thus, the victim or claimant in an action against a state

sponsor of terrorism must have been a United States citizen or national at the time of the incident

that gave rise to his claim(s). See Acosta, 574 F. Supp. 2d at 26.

Most of the actions in this Court against Iran have proceeded under that portion of the

terrorism exception relating to “the provision of material support or resources” for terrorist acts.

See, e.g., Flatow I, 999 F. Supp. 1; Eisenfeld v. Islamic Republic of Iran, 172 F. Supp. 2d 1

(D.D.C. 2000) (Lamberth, J.); Heiser v. Islamic Republic of Iran, 466 F. Supp. 2d 229 (D.D.C.

2006) (Lamberth, J.). The terrorism exception adopts the definition of “material support or

resources” set forth in the criminal code at 18 U.S.C § 2339A(b)(1):

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[T]he term “material support or resources” means any property, tangible

or intangible, or service, including currency or monetary instruments or financial

securities, financial services, lodging, training, expert advice or assistance,

safehouses, false documentation or identification, communications equipment,

facilities, weapons, lethal substances, explosives, personnel (1 or more individuals

who may be or include oneself), and transportation, except medicine or religious

materials[.]

See § 1605A(h)(3) (incorporating § 2339A(b)(1) by reference); see also § 1605(a)(7) (repealed).

This Court has determined that “the routine provision of financial assistance to a terrorist

group in support of its terrorist activities constitutes ‘providing material support and resources’

for a terrorist act within the meaning of the [terrorism exception of the FSIA].” Flatow I, 999 F.

Supp. 1 at 19. Additionally, this Court has found that “a plaintiff need not establish that the

material support or resources provided by a foreign state for a terrorist act contributed directly to

the act from which his claim arises in order to satisfy 28 U.S.C. § 1605(a)(7)’s statutory

requirements for subject matter jurisdiction.” Id. In other words, there is no “but-for” causation

requirement with respect to cases that rely on the material support component of the terrorism

exception to foreign sovereign immunity; “[s]ponsorship of a terrorist group which causes

personal injury or death of United States national alone is sufficient to invoke jurisdiction.” Id.;

see also Kilburn, 376 F.3d at 1129 (holding that Liyba’s actions need not be the “but for”

causation of an act of terrorism for the purpose of establishing subject matter jurisdiction under

the terrorism exception). Once the requirements for jurisdiction over a foreign state are satisfied

under the FSIA, then that foreign state can be held liable in a civil action “in the same manner

and to the same extent as a private individual under like circumstances.” § 1606.

When the FSIA state sponsor of terrorism exception was first enacted in April of 1996, it

was far from clear whether that statute, § 1605(a)(7), in and of itself, served as a basis for an

independent federal cause of action against foreign state sponsors of terrorism. While the waiver

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of foreign sovereign immunity was clear, and hence the provision authorized courts to serve as a

forum to adjudicate certain terrorism cases, questions remained regarding whether any civil

claims or money damages were available by virtue of that enactment. To clarify matters,

Congress created what is commonly referred to as the Flatow Amendment, which was enacted a

mere five months after the state sponsor of terrorism exception as part of the Omnibus

Consolidated Appropriations Act, 1997. See Pub. L. 104-208, § 589, 110 (1996), 110 Stat. 3009-

1, 3009-172 (codified at 28 U.S.C. § 1605 note). The Flatow Amendment provides in pertinent

part that:

An official, employee, or agent of a foreign state designated as a state

sponsor of terrorism . . . while acting within the scope of his office, employment,

or agency shall be liable to a United States national or the national’s legal

representative for personal injury or death caused by acts of that official,

employee, or agent for which courts of the United States may maintain

jurisdiction under section 1605(a)(7) of title 28, United States Code [repealed] for

money damages which may include economic damages, solatium, pain, and

suffering, and punitive damages if the acts were among those described in section

1605(a)(7).

§ 1605 note.

The amendment is named for Alisa Michelle Flatow, a 20-year-old Brandeis University

student from New Jersey who was mortally wounded in a suicide bombing attack on the Gaza

strip in April of 1995. Alisa Flatow’s father, Stephen Flatow, was one of the prime movers

behind the state sponsor of terrorism exception, and he successfully lobbied to have the

amendment incorporated as part of § 1605. See, e.g., Neely Tucker, Pain and Suffering;

Relatives of Terrorist Victims Race Each Other to Court, but Justice and Money are Both Hard

to Find, WASH. POST, Apr. 6, 2003, at F1 [hereinafter Tucker, Pain and Suffering] (recalling

Stephen Flatow’s lobbying efforts on behalf of the anti-terrorism legislation); see also Ruthanne

M. Deutsch, Suing State-Sponsors of Terrorism Under the Foreign Sovereign Immunities Act:

- 17 -

Giving Life to the Jurisdictional Grant After Cicippio-Puleo, 38 INT’L LAW. 891 (2004)

(discussing legislative history of the Flatow Amendment and collecting sources); SUITS AGAINST

TERRORIST STATES, supra note 4, at 5–7 (discussing legislative history of § 1605(a)(7) and

Flatow Amendment).

Stephen Flatow filed suit in this Court shortly after the enactment of the Flatow

Amendment. As administrator of Alisa Flatow’s estate, plaintiff asserted a wrongful death claim

and a claim for Alisa’s conscious pain and suffering prior to her death. See Flatow I, 999 F.

Supp. at 27–29. Plaintiff also asserted solatium claims for the mental anguish and grief suffered

by the decedent’s parents and siblings as a result of her murder by terrorists. See id. at 29–32.

Plaintiff also sought punitive damages. See id. at 32–35. Iran did not enter an appearance in the

action and has never appeared in any FSIA terrorism action to date. See id. at 6.5

The Flatow case was the first in the country to be decided against Iran under the terrorism

exception to the FSIA. See 999 F. Supp. at 6 n.2. In that decision, this Court examined the

statutory language of the terrorism exception, § 1605(a)(7), and the Flatow Amendment, § 1605

5

Iran has never appeared in these actions even though it is “an experienced litigant in the

United States Federal Court System generally and in this Circuit. See, e.g., Cicippio v. Islamic

Republic of Iran, 30 F.3d 164 (D.C. Cir. 1994), cert. denied 513 U.S. 1078 (1995); Foremost-

McKesson v. Islamic Republic of Iran, 905 F.2d 438 (D.C. Cir. 1990); Presinger v. Islamic

Republic of Iran, 729 F.2d 835 (D.C. Cir. 1984); Berkovitz v. Islamic Republic of Iran, 735 F.2d

329 (9th Cir. 1984); McKeel v. Islamic Republic of Iran, 722 F.2d 582 (9th Cir. 1983).” Flatow

I, 999 F. Supp. 1 at 6 n.1. Nevertheless, this Court cannot enter a default judgment against a

foreign sovereign unless the plaintiff “establishes his claim or right to relief by evidence

satisfactory to the Court.” 28 U.S.C. § 1608(e). Thus, this Court must carefully review the

plaintiff’s evidence with respect to both liability and damages.

While Iran has not defended itself in any of the lawsuits under the terrorism exception,

Iran has on occasion come to court to prevent plaintiffs from collecting on default judgments

entered under that provision. For example, Iran recently prevailed in an action to prevent the

attachment of one of its assets here in the United States. See, e.g., Ministry of Defense and

Support for the Armed Forces of the Islamic Republic of Iran v. Elahi, 129 S. Ct. 1732 (2009).

- 18 -

note, in pari materia and found that those provisions collectively established both subject matter

jurisdiction and federal causes of actions for civil lawsuits against state sponsors of terrorism.

See id. at 12–13. This Court also ruled that the Flatow Amendment was intended to ensure large

punitive damage awards against state sponsors of terrorism. See id. In this Court’s view, the

express provision of punitive damages in the Flatow Amendment, in conjunction with the

provisions’s legislative history, including statements by the Amendment’s co-sponsors,

Representative Jim Saxton and Senator Frank Lautenberg of New Jersey, demonstrated that

Congress believed punitive damage awards were absolutely necessary to ensure that civil actions

against state sponsors of terrorism would effectively deter those nations from perpetuating

international terrorism. See id. Thus, the Flatow Amendment served as an exception to the

general rule, as expressed in § 1606 of the FSIA, that foreign sovereigns are not to be held liable

for punitive damages.

During a two-day hearing in March of 1998, plaintiff proceeded in the manner of a non-

jury trial. Id. at 6. The evidence presented to the Court at that time demonstrated by clear and

convincing evidence that Iran was the sole source of funding for the Shaqaqi faction of Palestine

Islamic Jihad, a small terrorist cell that claimed responsibility for and in fact perpetuated the

suicide bombing that gravely wounded Alisa Flatow on April 9, 1995. Id. at 8–9. The suicide

bomber rammed a van full of explosives into the number 36 Egged bus that Alisa and others

were traveling in on their way to a Mediterranean resort in the Gush Katif community in Gaza.

Id. at 7. The resulting explosion destroyed the bus and sent shrapnel flying in all directions. Id.

A piece of that shrapnel pierced Alisa’s Flatow’s skull and lodged in her brain. Id. Once

Stephen Flatow learned that his daughter had been injured in the attack, he immediately flew to

Israel, and he rushed to the Soroka Medial Center, where Alisa was being treated. Upon his

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arrival there, however, the attending physician informed Mr. Flatow that his daughter Alisa

“showed no signs of brain activity, that all physical functions relied on life support, and that

there was no hope for her recovery.” Id. at 8. In emotionally powerful testimony before this

Court, Stephen Flatow described the heart-wrenching decision he made to have his daughter’s

life support terminated and her organs harvested for transplant. See id.

This Court ultimately awarded a total of 22.5 million dollars in compensatory damages.

More significantly, however, the Court also awarded 225 million dollars in punitive damages,

approximately three times Iran’s annual expenditures on terrorist activities at that time. See id. at

34. In providing for such a large award of punitive damages against Iran, this Court stressed the

importance of such awards as a means to deter states like Iran from supporting terrorist

organizations. The Court stated as follows:

By creating these rights of action, Congress intended that the Courts impose a

substantial financial cost on states which sponsor terrorist groups whose

activities kill American citizens. This Cost functions both as a direct deterrent,

and also as a disabling mechanism: if several large punitive damage awards

issue against a foreign state sponsor of terrorism, the state’s financial capacity

to provide funding will be curtailed.

Id. at 33 (emphasis added). The Court also recognized that any punitive damage award would

have to be substantial enough to have an appreciable impact in light of Iran’s significant annual

revenues from oil exports. See id. at 33–34.

At the time the Flatow decision was announced, there was a certain degree of energy and

optimism surrounding the action. Senator Frank Lautenberg held a press conference outside this

courthouse with Alisa Flatow’s parents and their attorneys. They underscored the importance of

the Court’s decision as a measure of justice for victims of terrorism, and they stressed the

importance of holding state sponsors of terrorism accountable for their support of terrorist

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groups. See Bill Miller & Barton Gellman, Judge Tells Iran to Pay Terrorism Damages; $247

Million Award for Family of U.S. Victim in Gaza, WASH. POST, Mar. 12, 1998, at A1. Steven

Perles, one of the attorneys for the Flatows, spoke of Iran’s wealth and expressed his belief that

the Flatows would “collect the entirety of the judgment.” See id. At the time, the popular

sentiment was that terrorism victims were going to “sue the terrorists out of business.” See

Tucker, Pain and Suffering, supra. In the years immediately following the Flatow decision,

many more plaintiffs relied on the original terrorism exception, § 1605(a)(7), in combination

with the Flatow Amendment, to successfully litigate cases against Iran. See, e.g., Stern v.

Islamic republic of Iran, 271 F. Supp. 2d 286 (D.D.C. 2003) (Lamberth, J.); Hutira v. Islamic

Republic of Iran, 211 F. Supp. 2d 115 (D.D.C. 2002) (Lamberth, J.); Eisenfeld, 172 F. Supp. 2d

1.6 Large judgments against the state sponsor of terrorism amassed quickly. Unfortunately, in

most cases, the victories obtained by plaintiffs in this courthouse merely signaled the beginning

of what would become a long, bitter, and often futile quest for justice.

6

Although this Judge ruled in Flatow that the Flatow Amendment,1605 note, did furnish

a cause of action against a state sponsor of terrorism, this Judge elected to revisit the issue even

more throughly in Cronin v. Islamic Republic of Iran, a case concerning an American Professor

who was taken hostage and tortured by Hizbollah in Beirut, Lebanon in 1984. See 238 F. Supp.

2d 222 (D. D.C. 2002) (Lamberth, J.). The Court did so in part because the Court of Appeals

had flagged the issue in Price by observing that “‘the amendment does not list ‘foreign states’

among the parties against whom an action may be brought.’” Cornin, 238 F. Supp. 2d at 231

(quoting Price, 294 F.3d at 87). As this Court revisited what was then a crucial question, this

Court observed that a majority of the judges of this Court by that time had ruled that the Flatow

Amendment did provide for a cause of action against a foreign state in cases in which that state is

not entitled to immunity by virtue of the terrorism exception, § 1605(a)(7). See id. at 233

(collecting cases). Nonetheless, § 1605 note is not a model of clarity, and as Judge Sullivan

pointed out in Roeder v. Islamic Republic of Iran, there are a number of valid reasons why

§ 1605 note should not be construed as furnishing substantive claims against foreign states. See

195 F. Supp. 2d 140, 171–175 (holding that Flatow Amendment did not furnish a cause of

action).

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2. Setbacks for Plaintiffs: The D.C. Circuit’s Decision in Cicippio-Puleo

Nearly six years following the Flatow decision, and contrary to what this Court and

others had determined, the D.C. Circuit Court of Appeals held that “[p]lainly neither section

§ 1605(a)(7) nor the Flatow Amendment, separately or together, establishes a cause of action

against foreign state sponsors of terrorism.” Cicippio-Puleo, 353 F.3d at 1027. According to the

Court of Appeals, the original terrorism exception to the FSIA, § 1605(a)(7), was “merely a

jurisdiction conferring provision,” and therefore it did not create an independent federal cause of

action against a foreign state or its agents. Id. at 1032. In other words, the prior version of the

terrorism exception, § 1605(a)(7), merely waived foreign sovereign immunity for designated

terrorist states with respect to actions taken by those states in furtherance of international

terrorism, but it did not furnish a legal claim for money damages that a terrorism victim might

then assert in a lawsuit against Iran or any other designated state sponsor of terrorism. Instead,

plaintiffs in terrorism cases were required to find a cause of action based on some other source of

law. Id. at 1037.

With respect to the Flatow Amendment, § 1605 note, the Court held that the provision

“provides a private right of action only against individual officials, employees, and agents of a

foreign state, but not against the foreign state itself.” Id. at 1027. Thus, the cause of action

furnished by the Flatow Amendment is severely restricted because it applies only to claims

against foreign state officials, employees, and agents, “in their individual capacities, as opposed

to their official capacities.” Id. at 1034 (emphasis in original). In reaching its holding, the Court

of Appeals emphasized that a claim against a foreign state official for actions taken within his

official capacity on behalf of a foreign government “‘is in substance a claim against the

government itself’” Id. (citations omitted). As the Court found that neither the plain language

- 22 -

nor the legislative history of the Flatow Amendment suggested that Congress intended to impose

liability on foreign governments, plaintiffs were precluded from relying on that provision for

either claims against Iran or claims based on acts taken by Iranian officials within the scope of

their official duties. Id. at 1034–1036. After rendering its ruling the Cicippio-Puleo, the Court

of Appeals remanded the action back to this Court in order to enable plaintiffs in that case to

amend their complaint to state a cause of action against Iran “under some other source of law,

including state law.” Id. at 1036.

As a result of the Cicippio-Puleo decision, plaintiffs in FSIA terrorism cases under

§ 1605(a)(7) began to use that provision as a “‘pass-through’” to causes of actions found in state

tort law. Bodoff v. Islamic Republic of Iran, 424 F. Supp. 2d 74, 83 (D.D.C. 2006) (Lamberth,

J.); see also Pescatore v. Pan Am. World Airways, Inc., 97 F.3d 1, 12 (2d Cir. 1996) (describing

how FSIA acts as pass-through to state law by virtue of § 1606) (quoting Zicherman v. Korean

Airlines Co, 516 U.S. 217, 229 (1996)). By using the pass-through approach under the earlier

version of the terrorism exception, § 1605(a)(7), most terrorism victims who pursued FSIA cases

against Iran were in fact able to litigate claims based on the tort law of the state jurisdiction

where they were domiciled at the time of the terrorist incident giving rise to the lawsuit.

In the large consolidated case of Peterson v. Islamic Republic of Iran, for example, this

Court found that Iran furnished money, weapons, training, and guidance to Hezbollah in direct

support of a terrorist plot that culminated in large-scale suicide bombing attack on the United

States Marine barracks in Beirut, Lebanon on October 23, 1983. See 264 F. Supp. 2d at 47–59

(D.D.C. 2003) [hereinafter Peterson I] (Lamberth, J.).7 More than 200 American servicemen

7

Peterson is consolidated with Boulos v. Islamic Republic of Iran, No. 01-CV-2684-RCL

(D.D.C.).

- 23 -

lost their lives and countless others were injured in the bombing. Prior to September 11, 2001,

the attack on the Marines in Beirut was the most deadly terrorist attack ever carried out against

American citizens. By examining the claims in that case under a number of sources of state law,

this Court awarded to the family members of the deceased servicemen and the injured survivors

of the Beirut attack exceeds 2.6 billion dollars and remains one of the largest judgments ever

awarded in a FSIA action pursuant to the state sponsor of terrorism exception. See Peterson v.

Islamic Republic of Iran, 515 F. Supp. 2d 25, 44–45 (D.D.C. 2007) [hereinafter Peterson II]

(Lamberth, J.). Like Peterson, the majority cases addressed in today’s opinion stem from the

1983 bombing of the Marine barracks facility in Beirut, Lebanon.

In another action considered today, Bennett v. Islamic Republic of Iran, plaintiffs

demonstrated how Iran’s financial support of Hamas helped to perpetrate terrorist attacks,

including a 2002 suicide bombing incident at Hebrew University in Jerusalem that claimed the

life of their 24-year-old daughter. See 507 F. Supp. 2d 117 (D.D.C. 2007) (Lamberth, J.). In

Bennett, the plaintiffs relied on California law. Similarly, in Beer v. Islamic Republic of Iran,

family members of an American killed in a suicide bombing of a bus in Jerusalem showed how

Iran’s material support to Hamas in the form of funding, safe haven, training, and weapons,

helped to spur on violent suicide attacks in Israel and elsewhere. 574 F. Supp. 2d 1 (D.D.C.

2008) (Lamberth, J.).8 The plaintiffs in Beer relied on New York common law.

8

This Court has also decided FSIA cases arising from Iran-sponsored terrorist attacks

that have occurred here in the United States. Acosta, for example, arose out of the assassination

of Rabbi Meir Kahane, an Israeli political figure and a founder of the Jewish Defense League,

who was gunned down by Islamic Jihadists as he was concluding a lecture in New York City on

November 5, 1990. See 574 F. Supp. 2d 15.

- 24 -

But while larger majority of plaintiffs in actions post-Cicippio-Puelo were able to use the

pass-through approach to find relief, hundreds of others equally dissevering plaintiffs had their

claims denied because they were domiciled in jurisdictions that did not afford them a substantive

claim. In the Peterson case, for example, some family members of the Marines and other

servicemen who were killed in the 1983 terrorist bombing were barred from asserting intentional

infliction of emotional distress claims (IIED) because they lacked standing under the applicable

state tort law. Consequently, this Court had to dismiss the IIED claims of family members who

were domiciled in either Pennsylvania or Louisiana at the time of the terrorist attack because

those jurisdictions would not permit IIED claims by family members who were not physically

present at the site of the incident that gave rise to the emotional distress. See Peterson II, 515 F.

Supp. 2d at 44–45. Thus, the Pennsylvania and Louisiana plaintiffs in the Peterson action were

effectively denied their day in court, and yet they watched as many other similarly situated

plaintiffs (including some of their own family members) from different state jurisdictions

advanced and ultimately prevailed with their claims for IIED. For those Pennsylvania and

Louisiana plaintiffs who were denied relief as so many others succeeded based on precisely the

same kinds of claims, based on the same horrific and unquestionably traumatic incident, the

result must have seemed both arbitrary and unfair.

In addition to the unfairness caused by a lack of uniformity in the underlying state

sources of law, the pass-through approach proved cumbersome and tedious in practical

application. In a given case based on a single terrorist incident, this Court would usually have to

resolve choice of law problems and then proceed through a lengthy analysis of tort claims under

the laws of numerous different state jurisdictions. For example, in the Heiser case, a large

consolidated action involving the Khobar towers bombing, this Court issued a 209-page opinion

- 25 -

in which it ultimately applied the laws of 11 different state jurisdictions. See 466 F. Supp. 2d

299. In Peterson, this Court had to apply the laws of nearly 40 different jurisdictions in order to

resolve the victims’ claims. See Peterson II, 515 F. Supp. 2d 25. To efficiently manage these

terrorism cases under the pass-through regime imposed by Cicippio-Puleo, this Court would

frequently refer the action to special masters after the Court determined under § 1605(a)(7) that

Iran provided material support for a terrorist incident that killed or injured Americans.9

Another consequence of the Cicippio-Puleo decision was that the Flatow Amendment

could not serve as independent basis for punitive damages awards against Iran. As the Court of

Appeals found that the amendment was not intended to provide for claims against foreign states,

the bar on punitive damages in § 1606 of the FSIA remained in tact, even with respect to state

sponsors of terrorism. Accordingly, large awards of punitive damages, like that which this Court

granted in Flatow to deter Iran from sponsorship of terrorist groups, were no longer available in

actions against the state of Iran under § 1605(a)(7).10

9

The application of diverse sources of substantive law to claims in accordance with the

pass-through approach under § 1605(a)(7) may sometimes requires courts to look to foreign

sources of law. See Oveissi, 573 F.3d 835. In Oveissi, the Court of Appeals ruled that this Court

must apply French law to resolve emotional distress and wrongful death claims brought by an

American grandson of General Gholam Oveissi, who was the head of the Iranian armed forces

under the Shah’s regime. General Oveissi was assassinated in France by Hezbollah operatives in

February of 1984.

10

In all of the civil actions against the Islamic Republic of Iran considered here today,

Iran’s Ministry of Information and Security (MOIS) is also named as a defendant. One of the

actions also includes the Iranian Islamic Revolutionary Guard Corps (IRGC) as a defendant. See

Rimkus v. Islamic Republic of Iran, No. 06-CV-1116-RCL (D.D.C.).

As noted, § 1606 of the FSIA provides that foreign states may not be held liable for

punitive damages, and, as a result of Cicippio-Puleo, that exemption from punitive damages

applies to state sponsors of terrorism in actions under § 1605(a)(7), notwithstanding the Flatow

Amendment. Section 1606 also provides, however, that an “agency or instrumentality” of a

foreign state, as opposed to the state itself, may be liable for punitive damages. Thus, certain

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3. The Never-Ending Struggle to Enforce Judgments Against Iran

In the years since the Flatow decision, a number of practical, legal, and political obstacles

have made it all but impossible for plaintiffs in these FSIA terrorism cases to enforce their

default judgments against Iran. This Court has examined this fundamental and longstanding

problem time and again as plaintiffs before this Court have sought, with very little success, to

entities of a foreign government may be liable for punitive damages. In terrorism cases against

Iran in this Court under § 1605(a)(7), plaintiffs have never identified an appropriate Iranian

agency that would qualify as an “agency or instrumentality” of Iran for the purpose of a punitive

damages award.

In Roeder v. Islamic Republic of Iran, a case that was decided only a few months prior to

Cicippio-Puleo, the Court of Appeals emphasized that it follows a categorical approach when

determining whether a foreign governmental entity should be considered “‘a foreign state or

political subdivision’ rather than an ‘agency or instrumentality of the nation’” for purposes of the

FSIA. 333 F.3d 228, 234 (D.C. Cir. 2003) (quoting Transaero, Inc. V. La Fuerza Aerea

Boliviana, 30 F.3d 148, 149–50 (D.C. Cir. 1994)). Under the categorical approach, “if the core

functions of the entity are governmental, it is considered the foreign state itself; if commercial,

the entity is an agency or instrumentality of the foreign state.” Id. In Roeder, the Court

determined that Iran’s Ministry of Foreign Affairs is part of the foreign state itself, rather than an

“agency of instrumentality” because the Ministry of Foreign Affairs, like a nation’s armed

forces, is governmental in nature. Id. Following the Roeder decision, this Court found that

MOIS must be considered part of the state of Iran itself and is therefore exempt from liability for

punitive damages. See, e.g., Haim v. Islamic Republic of Iran, 425 F. Supp. 2d 56, 71 n.2

(D.D.C. 2006) (Lamberth, J.).

In Rimkus, a case that is addressed in today’s consolidated opinion, the plaintiffs asserted

claims against IRGC as well as MOIS. In rendering the decision in Rimkus, this Court again

followed the categorical approach from Roeder and determined that IRGC, like MOIS, is part of

the state itself and is therefore exempt from punitive damage under the FSIA. See 575 F. Supp.

2d 181, 198–200 (D.D.C. 2008) (Lamberth, C.J.); see also Blais v. Islamic Republic of Iran, 459

F. Supp. 2d 40, 60–61 (D.D.C. 2006) (Lamberth, J.) (concluding that both MOIS and IRGC must

be treated as the state of Iran itself for purposes of liability); Salazar v. Islamic Republic of Iran,

370 F. Supp. 2d 105, 115–16 (D.D.C. 2005) (Bates, J.) (same). Consequently, in the years

following Cicippio-Puleo, plaintiffs in actions under the original terrorism exception,

§ 1605(a)(7), lacked a basis for claiming punitive damages in actions arising out of Iran-

sponsored terrorism.

Because claims against MOIS or IRGC are not legally distinguishable from claims

against Iran itself, this opinion refers to Iran as the only defendant.

- 27 -

locate and attach Iranian Government assets in aid of execution of their civil judgments. See,

e.g., Bennett v. Islamic Republic of Iran, 604 F. Supp. 2d 152 (D.D.C. 2009) (Lamberth, C.J.);

Peterson v. Islamic Republic of Iran, 563 F. Supp. 2d 268 (D.D.C. 2008) [hereinafter Peterson

III] (Lamberth, C.J.); Weinstein v. Islamic Republic of Iran, 274 F. Supp. 2d 53 (D.D.C. 2003)

(Lamberth, J.); Flatow v. Islamic Republic of Iran, 76 F. Supp. 2d 16 (D.D.C. 1999) [hereinafter

Flatow III] (Lamberth, J.); Flatow v. Islamic Republic of Iran, 74 F. Supp. 2d 18 (D.D.C. 1999)

[hereinafter Flatow II] (Lamberth, J.). To even begin to appreciate the difficulties plaintiffs face

with respect to locating Iranian property in the United States, it is important to first understand

the significance of the Iran-Hostage Crisis and its aftermath and, more specifically, the Algiers

Accords, the bilateral executive agreement between Iran and the United States that brought about

the settlement of the hostage crisis in 1981.

On November 14, 1979, ten days after the start of the Iran hostage crisis in which Iranian

revolutionaries seized the United States embassy in Tehran and took most embassy personnel as

hostages, President Carter exercised his powers under the International Emergency Economic

Powers Act (IEEPA), 50 U.S.C. §§ 1701–1706, and “blocked all property and interests in

property of the Government of Iran . . . subject to the jurisdiction of the United States.” Exec.

Order No. 12,170, 44 Fed. Reg. 65,729 (Nov. 14, 1979); see Transactions Involving Property in

Which Iran or Iranian Entities Have an Interest, 31 C.F.R. § 535.201; see also Dames & Moore

v. Regan, 453 U.S. 654, 662–664 (1981) (discussing the Iran Hostage Crisis and President

Carter’s actions in response to the Iran hostage crisis pursuant to his authority under the IEEPA).

Approximately five months later, as the hostage crisis continued to wane on, President

Carter severed diplomatic relations with Iran, and the State Department assumed custody of all

Iran’s diplomatic and consular property here in the United States. See, e.g., Bennett, 604 F.

- 28 -

Supp. 2d at 162–66 (discussing the termination of diplomatic relations with Iran and the State

Department’s assumption of custody over Iran’s diplomatic and consular properties within the

United States). The hostage crisis was finally resolved when Iran and the United States executed

the Algiers Accords on January 19, 1981, and all hostages were released the following day, just

moments after President Regan took office. See Iran-United States: Settlement of the Hostage

Crisis, Jan. 18–20, 1981, 20 I.L.M. 223 [hereinafter Algiers Accords]; Dames & Moore, 453

U.S. at 664–65 (discussing the release of the hostages and terms of the Algiers Accords).

As part of the Algiers Accords, the United States agreed in principle to restore the

financial position of Iran, in so far as possible, to that which existed prior to November 14,

1979.” Algiers Accords, 20 I.L.M. at 223, 224. Additionally, the United States “commit[ted]

itself to ensure the mobility and free transfer of all Iranian assets within its jurisdiction.” Id. at

223–224. Iran and the United States further agreed to settle all litigation between the two

governments, to include any outstanding litigation between the nationals of the two countries as

of January, 19 1981. Id. at 223–224, 230–232. To this end, the Algiers Accords established an

Iran-U.S. Claims Tribunal in the Hague to arbitrate any claims not settled within six moths. Id.

at 226, 230–34. Consistent with these commitments to restore Iran’s financial position, to

facilitate the transfer of Iranian assets, and to have unresolved claims presented to the Iran-

Claims Tribunal, the United States agreed to “bring about the transfer” of all Iranian assets held

in this country by American banks, with one billion dollars in those assets set aside on account of

the Central Bank of Algeria for the payment of any awards entered against Iran by the Claims

Tribunal. Id. at 225–27. The Claims-Tribunal would also have jurisdiction to revolve disputes

between Iran and the United States concerning each other’s compliance with the Algiers

Accords. Id. at 231.

- 29 -

To comply with the terms of the Algiers Accords, President Carter issued, and President

Regan subsequently ratified, a series of Executive Orders in which the President unblocked the

majority of Iran assets within the jurisdiction of the United States and directed United States

banks to transfer all Iranian assets to the Federal Reserve Bank of New York, where they would

be held or transferred to Iran as directed by the Secretary of the Treasury. See Dames & Moore,

453 U.S. at 665–66. Subsequent Executive Orders and treasury regulations have controlled the

transfer of Iranian Assets consistent with the Algiers Accords. See, e.g., Iranian Assets Control

Regulations, 31 C.F.R. pt. 535. Thus, practically speaking, there are simply few assets within

the United States that are available for plaintiffs to seize in satisfaction of their judgments under

the FSIA terrorism exception.

In Dames & Moore, the Supreme Court upheld the validity of actions taken by both

President Regan and Carter to settle the Iran Hostage Crisis through the implementation of the

Algiers Accords. 453 U.S. 654. Specifically, the Court examined two issues. First, the Court

addressed the validity of Executive Orders that nullified all attachments and similar

encumbrances on Iranian property in the United States and directed the transfer of Iranian assets

to the Federal Reserve Bank of New York for ultimate transfer back to Iran under the terms of

the Algiers Accords. Second, the Court addressed Executive Orders that suspended claims

pending against Iran in American courts and provided for those claims to be presented to Iran-

United States Claims Tribunal for resolution through binding arbitration.

With respect to the termination of attachments on Iran’s property and the transfer of

Iran’s assets, the Court found that Congress had provided in the IEEPA, 50 U.S.C. §§ 1701–

1706, specific authorization for the President to take those actions. Dames & Moore, 453 U.S. at

674–75. Accordingly, the Court relied on the strong presumption of validity traditionally

- 30 -

accorded to such Executive action pursuant to a federal statute, as described in Justice Jackson’s

famous concurrence in Youngstown Sheet & Tube Co. V. Sawyer, 343 U.S. 579 (1952), and held

that, in light of this “specific congressional authorization,” it could not find that the power

exercised by the President had exceeded the bounds of any powers afforded under the

Constitution. Dames & Moore, 453 U.S. at 675. The Court observed: “A contrary ruling would

mean that the Federal Government as a whole lacked the power exercised by the President, and

that we are not prepared to say.” Id. at 674 (citation omitted).

With respect to the suspension of claims, the Court ultimately upheld that action as well,

but the Court’s rationale was a bit more nuanced. While the Court could not identity a specific

authorization from Congress, the Court did find that, over more than two centuries, Congress had

either acquiesced in or implicitly approved of the settlement of claims of United States nationals

through executive agreement. See id. at 675–687. Thus, in light of what the Court deemed as

Congress’ consent to the President’s actions, the Court held that it could not say that the

President’s actions in suspending claims against Iran exceeded the President’s powers. Id. at

686.11

11

As a leading case on the scope of Federal Power, particularly Executive Power, as

exercised in the realm of foreign affairs and national security, and as a case concerning the

Algiers Accords and Iran specifically, Dames & Moore remains particularly relevant with

respect to many of the issues presented in the terrorism cases considered by this Court today.

For example, by reaffirming the strong presumption of validity that should attach to actions

expressly authorized by both political branches in the area of foreign affairs, Dames & Moore

lends supports to this Court’s ruling in Part E that § 1083(c) does not offend separation-of-

powers principles relating to the independence of the judiciary. Additionally, Dames & Moore

provides a historical perspective that helps to illustrate some of the unique challenges that

plaintiffs in FSIA terrorism cases against Iran face as a consequence of executive actions

implementing and honoring the terms of Algiers Accords.

More generally, then-Justice Rehnquist’s discussion in Dames & Moore concerning our

nation’s rich history and tradition of the use of Executive authority to settle claims between

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What few assets of Iran that might be found within jurisdiction of the United States

courts since the Algiers Accords are a subject to a dizzying array of statutory and regulatory

authorities due in large part to the federal government’s obligations under that bilateral executive

agreement, but also in part because of the increasing hostility in the relationship between Iran

and the United States in the wake of the hostage crisis and the continuous designation of Iran as a

state sponsor of terrorism since 1984. In fact, much like the assets of other state sponsors of

terrorism, most of Iran’s known property or interests in property are blocked, i.e., frozen, or

otherwise regulated under any number of United States sanctions programs.12

United States nationals and foreign sovereigns, see 453 U.S. at 678–687, provides an even

broader historical perspective that this Court finds highly instructive for the purposes of today’s

opinion. Indeed, as Justice Rehnquist illustrated in his opinion for the Court, the exercise of

Federal Power by the President to settle claims of U.S. nationals against foreign sovereigns—a

long-standing practice to which the Congress has acquiesced and occasionally supported by

legislation—has often proven to be the most effective way to ensure relief to United States

Nationals aggrieved by foreign sovereigns. In Part K of this opinion, this Court relies on the

time-honored practice of claims settlement by the Executive, as expressed in Dames & Moore, in

support of this Court’s call for reforms to help victims of Iran-sponsored terrorism find the relief

they deserve.

12

See TERRORIST ASSETS REPORT, supra note 2, at 2, 10. The Office of Foreign Assets

Control (OFAC) of the Treasury Department administers economic sanction programs relating to

terrorists, terrorist organizations, and officially designated state sponsors of terrorism. Each

year, OFAC publishes a report to Congress regarding assets in the United States that belong to

terrorist nations and other terrorist actors. This annual report discusses both blocked and non-

blocked assets of Iran, as well assets attributable to other state sponsors of terrorism. As such,

the Terrorist Assets Report is a good reference point for individuals interested in understanding

some of the tremendous difficulties terrorism victims face in their efforts to enforce judgments

entered against Iran under the FSIA terrorism exception.

According to the CRS, the blocked assets of Iran in the United States “includes property

that is blocked under the Iranian Assets Control Regulations, 31 C.F.R. pt. 535, since the hostage

crisis was resolved in 1981. The property blocked in 1981 remains blocked in part because of

pending claims before the Iran-U.S. Claims Tribunal.” Id. at 10. Other blocked assets include

Iran’s diplomatic and consular properties here in the United States, as well as any proceeds from

the leasing of those properties, which are now managed and maintained by the State

Department’s Office of Foreign Missions. Id. “Additionally, other sanction authorities designed

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Beyond the imposition of economic sanctions and other regulatory controls, however, the

inviolable doctrines of both foreign sovereign immunity and federal sovereign immunity have

often precluded the attachment or execution of property that plaintiffs have identified as

belonging to Iran. With respect to foreign sovereign immunity specifically, the FSIA itself has

long forestalled plaintiffs’ efforts to enforce judgments entered under § 1605(a)(7). This is

largely because, much like foreign sovereigns are generally immune from civil suit under the

FSIA, see § 1604, any property belonging to a foreign nation is similarly immune from

attachment and execution by judgment creditors. See § 1609. The relevant exceptions to the

general rule of immunity from the attachment or execution are listed in § 1610. Prior to the

enactment of last year’s reforms in the 2008 NDAA, however, these exceptions to the general

rule of immunity for foreign government property were limited almost exclusively to property

relating to the commercial activities of the foreign sovereign within the United States. See

§ 1610(a) and (b). Given the lack of formal relations between the United States and Iran, these

provisions have been of little utility to the judgment creditors of Iran in FSIA terrorism cases.

Thus, the FSIA facilitated a somewhat ironic and perverse outcome because on the one hand, in

§ 1605(a)(7), it created an opportunity for terrorism victims to sue Iran for money damages,

while on the other hand, in §§ 1609 and 1610, it denied these victims the legal means to enforce

their court judgments.13

to address national emergencies distinct from terrorism have also resulted in the blocking of

assets in which the Government of Iran has an interest.” Id. The report adds that Iran claims

Amiscellaneous blocked and non-blocked military property that it asserts was in the possession of

private entities in the United States when the hostage crisis was resolved in 1981. Id. at 12. The

United States disputes Iran’s claims and the matters are pending before the Claims-Tribunal. Id.

at 13.

13

Another challenge for plaintiffs looking to collect on their judgments in this context is

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In addition to the immunity from attachment or execution that the FSIA has long

provided to foreign property, assets held within United States Treasury accounts that might

otherwise be attributed to Iran are the property of the United States and are therefore exempt

from attachment or execution by virtue of the federal government’s sovereign immunity. See

Dep’t of the Army v. Blue Fox, Inc., 525 U.S. 255 (1999); State of Arizona v. Bowsher, 935 F.2d

332 (D.C. Cir. 1991). As the Supreme Court held in the seminal case of Buchanan v. Alexander,

United States sovereign immunity is an extremely broad bar to jurisdiction that prevents

creditors from attaching funds held by the United States treasury or its agents. 45 U.S. 20

(1846).

Because the federal government has assumed control over significant portions of what

limited Iranian assets remain in the United States, plaintiffs’ efforts to enforce judgments under

the FSIA have often pitted victims of terrorism against the Executive Branch. Under successive

presidential administrations, the Justice Department repeatedly moved to quash writs of

attachment issued by judgment creditors of Iran. Two frequently discussed and well-

documented examples concern the efforts of Stephen Flatow to enforce his civil judgment, which

culminated in litigation against the United States in this Court. See Flatow II, 74 F. Supp. 2d 18;

that many of the world’s leading financial institutions are agencies or instrumentalities of foreign

nations and are therefore immune from jurisdiction of the United States Courts under the FSIA.

See §§ 1603–1604. In Peterson, for example, this Court recently quashed writs of attachment

issued upon Japan Bank for International Cooperation, Bank of Japan, and the Export Import

Bank of Korea. See Peterson III, 563 F. Supp. 2d 268. Plaintiffs alleged that these three foreign

banks posses Iranian assets, but this Court found that all three banks are foreign state entities that

qualify for immunity from jurisdiction under the FSIA. For the same reasons, this Court quashed

numerous subpoenas that plaintiffs had issued to those financial institutions and denied

plaintiffs’ request for the appointment of a receivership for any and all assets of Iran held by

those foreign banks.

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Flatow III, 76 F. Supp. 2d 16. In both cases, this Court had to deny plaintiff relief and thereby

granted the federal government’s motion to quash.

In the first case, plaintiff issued writs that purported to attach credits held by the United

States for the benefit of Iran, including more than 5 million dollars in the United States Treasury

Judgment Fund, which had been earmarked to pay an award issued in Iran’s favor by the Iran-

United States Claims Tribunal. Flatow II, 74 F. Supp. at 20. Plaintiff pointed to the Iranian

Assets Control Regulations in support of his argument that money in the Treasury Judgment

Fund should be considered Iranian property that is potentially subject to attachment and

execution under the FSIA, 1610. See id. (citing 31 C.F.R. § 535.311 (1999)). In rejecting

plaintiff’s argument, this Court relied on Buchanan and Blue Fox, and held that funds in the

United States Treasury—regardless of whether those funds have been set aside to pay a debt to

Iran—remain immune from attachment by virtue of United States sovereign immunity. Id. at 21.

“In other words, funds held in the U.S. Treasury—even though set aside or ‘earmarked’ for a

specific purpose—remain the property of the United States until the government elects to pay

them to who they are owed.” Id. Accordingly, as the United States had not waived its sovereign

immunity with respect to those funds that had been earmarked to pay a Tribunal Award or other

debts to Iran, that money remained exempt from attachment or execution by virtue of federal

sovereign immunity. Id. at 23; see also Weinstein, 274 F. Supp. 2d at 58 (holding that funds

allegedly owed to Iran in the Treasury’s Foreign Military Sales (FMS) Program are immune

from attachment by virtue of federal sovereign immunity).

In the second case, plaintiff issued writs of attachment upon three parcels of real estate

owned by Iran that once served as the Iranian Embassy and as residences and offices for Iran’s

diplomatic personnel. Flatow III, 76 F. Supp. 2d at 18. Additionally, plaintiff issued writs of

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attachment upon two bank accounts that contained funds generated by the State Department’s

lease of Iran’s diplomatic properties. Id. The first of the two accounts was used to pay for the

maintenance and repair of Iran’s properties. Id. at 19. The second account contained all the

profits generated as a result of the lease of Iran’s foreign mission properties. Id.

The United States promptly intervened and moved to quash the writs, arguing that real

property and the related banks accounts were immune from attachment under the Foreign

Missions Act, the FSIA, the IEEPA, the Vienna Convention on Diplomatic Relations, and

Article II of the U.S. Constitution. Id. at 19. The plaintiffs countered that because Iran’s former

embassy properties were being managed and leased out to tenets by the Department of the State

under the auspices of the Foreign Missions Act, 22 U.S.C. §§ 4301–4313, the property was being

used for a “commercial activity” and therefore satisfied the requirements for attachment under

§ 1610(a)(7) of the FSIA. See Flatow III, 76 F. Supp. 2d. at 21.

Without reaching any of the more fundamental arguments raised by the government’s

motion to quash, this Court held that the leasing of Iran’s real property by the United States did

not qualify as a commercial activity in part because the United States’ action in taking custody of

Iran’s property under the authority of the Foreign Missions Act “was decidedly sovereign in

nature.” Id. at 23; see also Bennett, 604 F. Supp. 2d at 169 (relying on Flatow to grant United

States’ motion to quash writs of attachment recently issued on Iran’s foreign mission properties).

For similar reasons, the Court found that the bank account that was used by the State

Department’s Office of Foreign Missions (OFM) for the maintenance and repair of Iran’s real

property was also immune from attachment because the funds within that account were expended

by OFM in exercise of its statutory prerogative to provide for the upkeep properties that once

housed Iran’s foreign mission. Flatow III, at 24. This Court also found that the other account at

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issue, which simply contained the profits earned on the lease of Iran’s property, was immune

from attachment as a result of federal sovereign immunity. Id.

In some frustration, this Court observed in Flatow that President Clinton’s

Administration, including President Clinton himself, had both publicly and privately expressed

support for the victims of terrorism and for the plaintiffs in these terrorism cases specifically, and

yet the Clinton Justice Department repeatedly fought efforts by these victims to enforce court

judgments under the FSIA. See Flatow II, 74 F. Supp. 2d at 26; Flatow III, 76 F. Supp. 2d at 19–

20. Moreover, as will be discussed below, President Clinton twice blocked reforms to the FSIA

that would have subjected Iran’s blocked assets to attachment and execution. See infra pp. 39–

40; SUITS AGAINST TERRORIST STATES, supra note 4, at 10–12 (discussing President’s exercise

of waiver authority with respect to provisions that would have permitted attachment and

execution upon frozen assets of state sponsors of terrorism); see also Flatow, 76 F. Supp. 2d 16

(noting President’s first exercise of waiver in the interest of national security of provision that

would have permitted attachment of blocked assets). In a letter to the Washington Post cited by

this Court in two of its published decisions, Stephen Flatow documented his meetings with

President Clinton, including private meetings and phone calls, as well as his meetings with other

high ranking members of the Clinton Administration. See Stephen Flatow, In This Case, I Can’t

Be Diplomatic; I Lost a Child to Terrorism; Now I’m Losing U.S. Support, WASH. POST, Nov. 7,

1999, at B2. Mr. Flatow explained how he grew tremendously frustrated in his long pursuit of

justice in which he received statements of support from the Executive Branch, as well as

personal assurances of assistance, only to later find that the administration proved to be the most

formidable adversary in his efforts to execute judgment upon the blocked assets of Iran. In

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reflecting on his experiences some years later, Stephen Flatow referred to his litigation against

the United States “as a real cat fight.” Tucker, Pain and Suffering, supra.

As this Court observed how many plaintiffs struggled to enforce their court judgments in

FSIA terrorism cases against Iran, this Court began to refer these judgments as “Pyrrhic

Victories.” Eisenfeld, 172 F. Supp. 2d at 9; Flatow III, 76 F. Supp. 2d at 27. Moreover, this

Court expressed dismay over the fact that the rule of law was being frustrated in these actions.

Eisenfeld, 172 F. Supp. 2d at 9. Allowing plaintiffs to go forward with suits under § 1605(a)(7)

while not freeing up Iran’s assets to satisfy those judgments under § 1610, or through the release

of blocked assets under United States’ control, was a quintessential example of the federal

government promising with one hand what it takes away with the other. In fact, it is not

uncommon for plaintiffs to receive mixed signals from Congress and the President in this highly-

charged political context. See, e.g., Roeder, 195 F. Supp. 2d at 145 (observing that the political

branches of the Government “should not with one hand express support for the plaintiffs and

with the other leave it to this Court to play the role of the messenger of bad news”).

In view of the challenges that plaintiffs encountered in their efforts to execute judgments

against the assets of state sponsors of terrorism here in the United States, Congress did make a

number of efforts on behalf of the victims of terrorism to free up blocked assets for judgments

under § 1605(a)(7). The first law enacted as part of this effort to free up assets of state sponsors

of terrorism was included in the Omnibus Consolidated and Emergency Supplemental

Appropriations Act, 1999. Pub. L. No. 105-277, div. A, tit. I, § 117(a), 112 Stat. 2681-0, 2681-

491 (codified at § 1610(f)(1)(A)). That measure created a new exception—§ 1610(f)—which

allowed for the first time attachment and execution against blocked assets of state sponsors of

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terrorism.14 When Congress passed this measure, however, it also provided that the President

could waive the provision “in the interest of national security.” § 1610(f)(3). Upon signing the

bill into law, President Clinton exercised that waiver authority. See Pres. Determ. No. 99-1, 63

Fed. Reg. 59,201 (Oct. 21, 1998). In doing so, the President stated:

Absent my authority to waive section 117’s attachment provision, it would

effectively eliminate the use of blocked assets of terrorist States in the national

security interests of the United States, including denying an important source of

leverage. In addition, section 117 could seriously impair our ability to enter into

global claims settlements that are fair to all U.S. claimants, and could result in

U.S. taxpayer liability in the event of a contrary claims tribunal judgment. To the

extent possible, I shall construe section 117 in a manner consistent with my

constitutional authority and with U.S. international legal obligations, and for the

above reasons, I have exercised the waiver authority in the in the national security

interest of the United States.

Statement on Signing the Omnibus Consolidated and Emergency Supplemental Appropriations

Act, 1999, 2 PUB. PAPERS 1843, 1847 (Oct. 23, 1998). Thus, § 1610(f)(1)(A)—which would

have broadly subjected Iranian assets to attachment and execution—was rendered a nullity.15

14

Section 1610(f)(1)(A) of the FSIA has not changed in substance since its enactment in

1998. It was amended slightly by § 1083 of the 2008 NDAA in order to account for the repeal of

§ 1605(a)(7) and enactment of § 1605A. The exception now reads as follows:

Notwithstanding any other provision of law, including but not limited to

section 208(f) of the Foreign Missions Act (22 U.S.C. 4308(f)), and except as

provided in subparagraph (B), any property with respect to which financial

transactions are prohibited 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. 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 (including any agency or instrumentality or such

state) claiming such property is not immune under section 1605(a)(7) (as in effect

before the enactment of section 1605A) or section 1605A.

15

The Supreme Court has long recognized the important role that blocked assets can play

in a President’s efforts to manage a foreign policy crisis. See Dames & Moore v. Regan, 453

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The following term, Congress passed the Victims of Trafficking and Violence Protection

Act of 2000 (VTVPA), in which Congress again tried to subject blocked assets of state sponsors

of terrorism to attachment of execution. Pub. L. No. 106-386, § 2002, 114 Stat. 1464, 1541.

Specifically, Congress aimed in the VTVPA to resurrect § 1610(f)(1)(A) of the FSIA and thus

repealed the waiver authority that was exercised by President Clinton under § 117(d) of the

Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999. See

§ 2002(f)(2). Oddly enough, however, Congress replaced that earlier waiver provision with a

new, and nearly identical provision, that again granted the President the authority to waive

§ 1610(f)(1)(A) “in the interest of national security.” § 2002(f)(1)(B). Upon singing the

VTVPA into law, the President again exercised the waiver authority, as granted by Congress,

which again rendered § 1610 a nullity. Thus, § 1610(f) remains inapplicable in cases under the

FSIA terrorism exception.

More significantly, the VTVPA also directed the Secretary of Treasury to pay the

compensatory damages awarded in court judgments to plaintiffs in a limited number of FSIA

terrorism cases against Iran or Cuba. § 2002(a). With respect to the payment of judgments

against Iran specifically, the VTVPA directed the Secretary of Treasury to make those payments

out of the rental proceeds that had been accrued as a result of the federal government’s lease of

U.S. at 673 (1980) (relying on Propper v. Clark, 337 U.S. 472, 493 (1949)). In Dames &

Moore, the Court emphasized that blocked assets “serve as a ‘bargaining chip’ to be used when

dealing with a hostile country.” 453 U.S. at 673. Notably, the Court also observed how

subjecting frozen assets Ato attachments, garnishments, and similar encumbrances” would enable

Aindividual claimants throughout the country to minimize or wholly eliminate this ‘bargaining

chip.’” Id. at 673. The efforts by Congress to subject the blocked assets of terrorists states to

attachment and execution has been one of the most controversial issues pertaining to the FSIA

terrorism exception. The tug of war between Congress and the President over this thorny issue

serves as a great example of the ways in which the FSIA terrorism exception and its related

enactments constitute a “delicate legislative compromise.” Price, 294 F.3d at 86.

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Iranian diplomatic and consular property and from appropriated funds “not to exceed the total of

the amount in the Iran Foreign Military Sales Program account within the Foreign Military Sales

Fund.” § 2002(b).16 Once an eligible plaintiff accepts a payment of compensatory damages

from the United States Treasury on a judgment against Iran, the plaintiff’s right to pursue that

claim is “fully subrogated” to the United States. Id. As a result of the VTVPA, precisely ten

cases against Iran qualified for payments from the United States Treasury. See TERRORIST

ASSETS REPORT, supra note 2, at 12–15, app. A (discussing VTVPA program for payment of

compensatory damage in judgments entered against Iran and Cuba and listing cases). Flatow

was among the cases that qualified, and Stephen Flatow, along with plaintiffs in all of the nine

other qualifying cases, opted to have their compensatory damages paid by United States. See id.;

see also Tucker, Pain and Suffering, supra (discussing Stephen Flatow’s acceptance of payment

of compensatory damages from the United States Treasury and his ongoing efforts to enforce the

punitive damages portion of his judgment against Iran). Subsequent legal enactments have

expanded the number of cases with judgments against Iran that are eligible for payments from

the United States Treasury. See Foreign Relations Authorization Act, Fiscal Year 2003, Pub. L.

No. 107-228, § 686, 116 Stat. 1350, 1411 (2002); Terrorism Risk Insurance Act of 2002 (TIRA),

Pub. L. No. 107-297, § 201, 116 Stat. 2322, 2337–39.

16

The Foreign Military Sales (FMS) Program account for Iran is a United States Treasury

account, subject to federal sovereign immunity, which contains funds relating to military

transactions with Iran that pre-date the Iran-hostage crisis and which are currently the subject of

ongoing litigation before the Iran-U.S. Claims Tribunal. See Weinstein, 274 F. Supp. 2d

(discussing the FMS Program account and holding that federal sovereign immunity bars

attachment); TERRORIST ASSETS REPORT, supra note 2, at 16–17 (discussing both the VTVPA

and the FMS Program account).

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In the TRIA, Congress not only expanded the class of plaintiffs eligible for payment from

the United States Department of Treasury under the VTVPA, but, even more fundamentally,

Congress finally succeeded in subjecting the assets of state sponsors of terrorism to attachment

and execution in satisfaction of judgments under § 1605(a)(7). See § 201. The TRIA provides

that “[n]otwithstanding any other provision of law,” the blocked assets of a terrorist state are

subject to attachment or execution to the extent of any compensatory damages awarded against

that state under the FSIA terrorism exception. Id. The TRIA does, however, continue to exempt

diplomatic and consular property from attachment and execution under § 1610. See

§ 201(d)(2)(B)(ii). Nonetheless, the TRIA has opened a wide range of blocked assets to

attachment and execution by the judgment creditors of state sponsors of terrorism. Thus, the

TRIA appears to represent something of a victory for these terrorism victims—whose interests

have been most vigorously advanced by members of Congress—over the longstanding

objections of the Executive Branch.

In the case of Iran, however, the simple fact remains that very few blocked assets exist.

In fact, according to OFAC’s latest report, there are only 16.8 million dollars in blocked assets

relating to Iran. TERRORIST ASSETS REPORT, supra note 2, at 14, tbl. 1. This amount is

inconsequential—a mere drop in the bucket—when compared to the staggering 9.6 billion

dollars in outstanding judgments entered against Iran in terrorism cases as of August 2008,

which is the last time the Congressional Research Service compiled data on this issue. Id. at 75,

app. B, tbl. B-1. The amount of Iranian non-blocked assets within the United States, as reported

to OFAC, is similarly inconsequential in comparison to Iran’s liability under the FSIA terrorism

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exception. According to OFAC, the amount of non-blocked Iranian assets is merely 28 million

dollars. Id. at 15, tbl. 3.17

The billions of dollars in liability that Iran now faces is likely to increase tremendously as

a result of the new federal cause of action under § 1605A, which now includes punitive damages.

Thus, Congress has continued to fuel expectations in these actions by broadly subjecting Iran to

suit for sponsorship of terrorism while simultaneously ignoring the fact that the prospects for

recovery are virtually nonexistent. This fundamental problem is an issue that the Court will

explore later in this opinion in Part K below.

17

In fairness, it is important to emphasize here that “there is no requirement for U.S.

persons to report non-blocked assets to OFAC.” TERRORIST ASSETS REPORT, supra note 2, at 10.

Thus, arguably, there could be any number of undisclosed, non-blocked Iranian assets within the

jurisdiction of the United States courts. In light of the lack of formal relations between Iran and

the United States, however, the prospect of large sums of Iranian assets being located within the

jurisdiction of the federal courts seems remote.

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B.

SECTION 1083 OF THE 2008 NDAA AND

THE CREATION OF A NEW TERRORISM EXCEPTION, SECTION 1605A

In light of the significant setbacks that plaintiffs experienced in actions under

§ 1605(a)(7), Congress implemented a number of major reforms last year. Section 1083 of

National Defense Appropriations Act (NDAA) completely repeals § 1605(a)(7) and replaces that

provision with a new statute, § 1605A. As noted above, it is important to keep in mind that the

exception to foreign sovereign immunity under the new provision, § 1605A, is identical to that

which is contained in § 1605(a)(7), but this new law is more comprehensive and more favorable

to plaintiffs because it adds a broad array of substantive rights and remedies that simply were not

available in actions under § 1605(a)(7).

As noted above, § 1605A accomplishes four basic objectives. This new terrorism statute

(1) furnishes a cause of action against state sponsors of terrorism; (2) makes punitive damages

available in those actions; (3) authorizes compensation for special masters; and (4) implements

new measures designed to facilitate the enforcement of judgments. Each of these four key

aspects of § 1605A will now be discussed in turn.

1. New Federal Cause of Action

With respect to the first objective, the new law now expressly provides that designated

state sponsors of terrorism may be subject to a federal cause of action for money damages if

those terrorist states cause or otherwise provide material support for an act of terrorism that

results in the death or injury of a United States citizen or national. See § 1605A(c). This new

federal right of action for money damages abrogates Cicippio-Puleo, 353 F.3d 1024, and is a

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crucial change in the law for hundreds of FSIA terrorism plaintiffs who were not able to rely on

state tort law to create a cause of action against Iran previously.

Thanks to the enactment of § 1605A, the inconsistent and varied result that was reached

in Peterson and in similar cases under § 1605(a)(7) will be avoided in actions going forward

under the new law. Courts can now work from a single federal cause of action that will ensure a

greater degrees of fairness to FSIA terrorism plaintiffs while furnishing a level of consistency

and uniformity that is critical in matters of foreign relations.18

The new cause of action included with the new terrorism exception § 1605A has a new

and expanded statute of limitations. Specifically, § 1605A(b) provides:

An action may be brought or maintained under this section if the action is

commenced, or a related action was commenced under section 1605(a)(7) (before

the date of the enactment of this section) or [the Flatow Amendment] not later

than the later of—

(1) 10 years after April 24, 1996; or

(2) 10 years after the date on which the cause of action arose.

§ 1605A(b) (emphasis added). The prior statute of limitations applicable to actions under

§ 1605(a)(7) was simply 10 years from the date the cause of action arose (leading to a cut-off

date in April 2006), subject, in some instances, to equitable tolling. See § 1605(f) (repealed by

§ 1083(b)). Accordingly, many new actions that might have been barred by the statute of

limitations for § 1605(a)(7) may now move forward under § 1605A.

18

Unlike § 1605(a)(7), the Flatow Amendment, § 1605 note, was not repealed by § 1083

of the 2008 NDAA. Thus, technically speaking, the Flatow Amendment remains on the books

even though it was rendered a virtual nullity by the Cicippio-Puleo decision. Moreover, to the

extent that the Flatow Amendment might have any operative effect, the provision is now largely

superfluous in light of the private right of action contained in the new terrorism exception,

§ 1605A.

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As § 1605A establishes a new federal cause of action against state sponsors of terrorism,

this Court will have to determine what basic principles of law should be applied to resolve claims

sounding in tort pursuant to this new private right of action under the FSIA. This is an important

issue that many judges of this Court grappled with through the application of the Flatow

Amendment in FSIA terrorism cases that reached final judgments prior to the Circuit’s ruling in

Cicippio-Puleo.19 At that time, judges of this Court frequently referred to “federal common law”

as providing the rule of decision for claims under the FSIA. See, e.g., Stethem v. Islamic

Republic of Iran, 201 F. Supp. 2d 78, 89 (D.D.C. 2002) (Jackson, J.); Wagner v. Islamic

Republic of Iran, 172 F. Supp. 2d 128, 134 (D.D.C. 2001) (Jackson, J.); Flatow I, 999 F. Supp. 1

at 15.

In Bettis v. Islamic Republic of Iran, however, which one of the last FSIA terrorism cases

decided by the Circuit prior to Cicippio-Puleo, the Court of Appeals cautioned trial judges

against the use of the term “federal common law.” 315 F.3d 325, 333 (D.C. Cir. 2003). The

appeal in Bettis involved claims for intentional infliction of emotional distress. In examining

those claims, the Court warned that the Flatow Amendment did not “‘authorize federal courts to

fashion a complete body of federal law’” to address the claims of plaintiffs under that statute. Id.

(quoting Burks v. Lasker, 441 U.S. 471, 476 (1979)). Instead of relying on “federal common

law,” the Court looked to § 46 of the Restatement (Second) of Torts, as well as a number of

19

See, e.g., Jenco v. Islamic Republic of Iran, 154 F. Supp. 2d 27 (D.D.C. 2001)

(Lambeth, J.) (relying on tort law treatises, including the Restatement (Second) of Torts, as well

as leading state court decisions to resolve claims of battery, assault, false imprisonment, and

intentional infliction of emotional distress); Sutherland v. Islamic Republic of Iran, 151 F. Supp.

2d 27 (D.D.C. 2001) (Lamberth, J.) (applying the Restatement (Second) of Torts to resolve

claims of battery, assault, false imprisonment, and intentional infliction of emotional distress);

Flatow I, 999 F. Supp. 1 (applying common law standards for wrongful death, survival pain and

suffering, and solatium).

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secondary source compilations, such as legal encyclopedias, law reviews, and survey of leading

state tort law cases. See id. at 333–338.

Admittedly, Bettis was decided under the Flatow Amendment, but this Court finds

nonetheless that Bettis should still control now that Congress has clearly established a private

right of action against a foreign state sponsor of terrorism for “personal injury or death” in those

cases in which terrorism exception to foreign sovereign immunity applies. § 1605A(c). The

questions confronted relating to sources of common law for claims sounding in tort under the

Flatow Amendment, are, in substance, the same as those that will now confront this Court as

result of the new private right of action in § 1605A(c). Thus, the question of what substantive

tort law norms should control in these actions is an issue this Court will have to continue to

explore in actions under § 1605A, as it once did in actions under the Flatow Amendment prior to

Cicippio-Puleo.20

20

In cautioning against the use of federal common law, the Court of Appeals in Bettis

relied heavily on § 1606 of the FSIA. That provision provides in relevant part: “As to any claim

for relief with respect to which a foreign state is not entitled to immunity under section 1605 or

section 1607 of this chapter, the foreign state shall be liable in the same manner and to the same

extent as a private individual under like circumstances.” The Court reasoned that § 1606 “in

effect instructs federal judges to find relevant law, not to make it.” 315 F.3d at 333. At this

juncture, however, it is unclear whether § 1606 should even apply in cases that rely on the new

federal cause of action in § 1605A. For starters, § 1606 by its plain terms applies only to

sections § 1605 and § 1607 of the FSIA. Moreover, § 1606 conflicts with § 1605A because it

provides that punitive damages are not available in actions against foreign states, whereas

§ 1605A expressly authorizes punitive damages in cases against state sponsors of terrorism.

Notably, Congress did not make any changes or updates to § 1606 when it repealed § 1605(a)(7)

in the 2008 NDAA, and yet Congress did include a lengthy list of “Conforming Amendments” in

§ 1083(b) to ensure that both § 1605A and other reforms relating to terrorism actions, such as

§ 1610(g), were properly integrated into the larger statutory scheme of the FSIA. Thus, this

Court can reasonably infer that Congress’ failure to update § 1606 to include a reference to

§ 1605A evinces Congress intent that those standards pertaining to the scope of foreign state

liability in § 1606 do not apply in actions against state sponsors of terrorism under § 1605A.

Consistent with the approach this Court initially took in Flatow, some commentators

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As this Court views Bettis as the as the controlling precedent with respect to application

of tort law principles to in cases under the FSIA terrorism exception, this Court will therefore

look to that decision as the starting point for the analysis of substantive claims under § 1605A.

Consistent with Bettis, this Court will rely on well-established principles of law, such as those

found in Restatement (Second) of Torts and other leading treatises, as well as those principles

that have been adopted by the majority of state jurisdictions. Today, this Court will issue a

separate opinion in the consolidated action of Heiser v. Islamic Republic of Iran, No. 00-CV-

23290-RCL (D.D.C.), a case concerning the Khobar Towers bombing, in which this Court

analyzes new claims for compensatory damages under § 1605A. Plaintiffs looking for more

guidance regarding the standards that this Court will apply to claims under § 1605A should

review that decision in conjunction with this omnibus opinion.

2. Punitive Damages

The second key reform found in § 1605A is the availability of punitive damages. See

§ 1605A(c). Consequently, the majority of the of the plaintiffs in prior actions under

§ 1605(a)(7) who were unable to claim punitive damages following the Cicippio-Puleo decision

will now have an opportunity to do so. The prospect of large punitive damage awards may help

have urged courts to fashion federal common law standards as the substantive rules of decision

in cases under the FSIA terrorism exception. See Deutsch, supra, at 891 (criticizing Bettis and

urging the adoption of federal common law standards to resolve terrorism claims under the FSIA

terrorism exception). Ms. Deutsch argues that federal common law standards are needed in this

area largely because of the unique nature of claims involving acts of international terrorism, the

primacy of the federal interest in terrorism cases, and the potential inconsistencies that may

result from reliance on state law standards. In the absence of additional guidance from the Court

of Appeals on this issue, this Court is bound to follow the admonishment in Bettis and will

therefore eschew any reliance on “federal common law.”

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to deter Iran and other states sponsors of terrorism from their support of international terrorist

organizations.

Through the separate opinion and judgment entered in Heiser, this Court awards

plaintiffs in that action punitive damages under § 1605A(c)). In doing so, the Court reaffirms the

principles first articulated in Flatow with respect to awards of punitive damages against Iran.

Other plaintiffs who now seek punitive damages under § 1605A should review this Court’s

discussion of punitive damages in Flatow and look to the opinion issued today in Heiser.

3. Compensation for Special Masters

Over the years, a number of attorneys have been appointed by this Court to serve as

special masters to assist the Court in determining money damage awards for the many individual

plaintiffs and estates represented on this Court’s sizable docket of civil actions against Iran. The

work completed by these officers of the Court is extraordinarily tedious and time-consuming,

and, until recently, the special masters were not entitled to any compensation for their efforts. In

last year’s NDAA, however, Congress directed that special masters in cases against designated

states sponsors of terrorism should receive compensation for their work, and thus the new

terrorism exception now provides that special masters should be reimbursed for their work from

the Attorney General’s Victims of Crime Fund. See § 1605A(e).

4. More Robust Provisions for the Execution of Civil Judgments

Like many prior legislative enactments relating to civil suits against designated state

sponsors of terrorism, the new terrorism exception in combination with certain other reforms

achieved through § 1083 takes aim at what is perhaps the most fundamental problem confronting

these actions: the inability of plaintiffs to execute their civil judgments against Iran. As noted

above, supra, most plaintiffs in FSIA terrorism cases have been thwarted in their efforts to

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execute civil judgments in part because there are few Iranian Government assets within the

jurisdiction of the United States Courts. What little that does exist is generally immune from

attachment or execution under § 1609. Additionally, in the past plaintiffs have encountered the

problem of United States sovereign immunity because most property or interests in property

within the United States that might be attributed to state sponsors of terrorism are subject to

federal regulatory control, or are, in a number of instances, within the possession of the federal

government. See, e.g., Weinstein, 274 F. Supp. 2d 53.

In an apparent effort to overcome some of the challenges relating to the execution of

judgments, § 1605A entitles plaintiffs to what are in effect automatic pre-judgment liens on

property belonging to a designated state sponsor of terrorism.21 In addition to these new pre-

judgment attachment procedures, any actions filed or otherwise maintained under § 1605A may

benefit from certain reforms to § 1610, which is the section of the FSIA that prescribes the

limited circumstances in which the property of a foreign state may be subject to attachment or

execution upon a civil judgment. Specifically, § 1083 of the 2008 NDAA adds to § 1610 new

provisions that are plainly intended to limit the application of foreign sovereign immunity or

21

The procedure in § 1605A(g) entitles plaintiffs to file notices of lis pendens. Generally

speaking, a notice of lis pendens concerns specific property belonging to a party involved in civil

litigation. See generally, 51 AM. JUR. 2D Lis Pendens § 2. The lis pendens notice serves to alert

third parties that any rights concerning the noticed property are subject to the outcome of the

civil litigation. See generally id. While it is not technically a lien, the legal effect of a properly

filed notice of lis pendens is that any third-party purchaser who receives title to the noticed

property is bound by the outcome of the civil case, without any additional rights to that property.

See generally id. Lis pendens is a creature of state law that has never before been available

through the federal courts. Consistent with the new statutory entitlement contained in

§ 1605A(g), this Court recently approved a form and procedures for plaintiffs to file notices of

lis pendens in the consolidated action of Heiser v. the Islamic Republic of Iran, No. 00-CV-2329-

RCL (D.D.C.) and Campbell v. Islamic Republic of Iran, 01-CV-2104-RCL (D.D.C.). See

Heiser, No. 00-CV-2329-RCL (D.D.C.), Dk. ## 144–145; Campbell, 01-CV-2104-RCL

(D.D.C.), Dk. ## 132, 135.

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United States sovereign immunity as defenses to attachment or execution with respect to

property belonging to designated states sponsors of terrorism. See § 1083(b) (“Conforming

Amendments”) (codified at § 1610(g)). The full implications of § 1610(g) are far from clear.

Only time will tell whether § 1610(g) will enable plaintiffs going forward with actions under

§ 1605A to experience greater success in executing civil judgments against Iranian assets. Given

the scarcity of assets and the difficulty of locating what assets might be available—it seems

unlikely that this provision will be of great utility to plaintiffs. Suffice it to note, however, these

latest additions to the FSIA demonstrate that Congress remains focused on eliminating those

barriers that have made it nearly impossible for plaintiffs in these actions to execute civil

judgments against Iran or other state sponsors of terrorism.

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C.

RETROACTIVE APPLICATION OF SECTION 1605A TO

CASES PREVIOUSLY FILED UNDER SECTION 1605(a)(7)

Today the Court must determine whether the new terrorism exception should be applied

retroactively to reach cases that were originally filed under § 1605(a)(7) prior to enactment of the

new statute, § 1605A. In this instance, Congress has in § 1083(c) of the 2008 NDAA provided

guidance with respect to the retroactive reach of this new provision of law, and so the Court's

analysis begins with that statutory guidance. See, e.g., Hamdan v. Rumsfeld, 548 U.S. 557, 575–

584 (2006) (applying “ordinary principles of statutory construction” to determine whether the

Detainee Treatment Act should operate retroactively); Landgraf, 511 U.S. at 271 (noting that

when “Congress has expressly prescribed the statute’s proper reach[,] there is no need to resort to

judicial default rules”). Section § 1083 contains a number of subsections, but two are especially

critical for purposes of this Court’s analysis. These are subsections (c)(2) and (c)(3), which set

forth the qualifying conditions and procedures that must be fulfilled before a prior action under

§ 1605(a)(7) may be eligible to proceed under the new terrorism law, § 1605A.

Subsection (c)(2) refers to “Prior Actions,” but this subsection actually concerns a

relatively narrow category of prior cases, all of which are probably best characterized as pending

cases. Pending in this instance means cases that were awaiting a disposition by a court at the

time of the 2008 NDAA’s enactment. This includes actions that were on direct appeal and those

with unresolved postjudgment motions.

The next subsection, (c)(3), referring to “Related Actions,” reaches a far broader category

of cases, including many that simply were not pending with the courts in any form at the time the

2008 NDAA became law. This is because the plain terms of the related-actions provisions in

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subsection (c)(3) specify that if an action was timely commenced under § 1605(a)(7), then Aany

other action arising out of the same act or incident may be brought under section 1605A”

§ 1083(c)(3) (emphasis added). Thus, the heading of § 1083(c)—“Application to Pending

Cases”—is something of a misnomer because, in reality, § 1083(c) may encompass cases that are

not pending at all—meaning prior actions that have since reached final judgment and are no

longer before the courts in any form.

Additionally, there are two other aspects of § 1083(c) that are critical to today’s analysis.

First, the statute sets up limitation periods or filing deadlines for plaintiffs desiring to take

advantage of the newly enacted terrorism statute. See § 1083(c)(2)(C), (c)(3). Second, in a

section of the statute referred to as “Defense Waived,” the enactment provides that the defenses

of res judicata and collateral estoppel are waived to the extent that such defenses are based on a

claim that was presented in a prior FSIA terrorism case under § 1605(a)(7). See § 1083(c)(2)(B).

As each of these provisions within § 1083(c) are central to today’s decision, the Court

will now review the specifics of each of these statutory mandates in turn.

1. Section 1083(c)(2) – “Prior Actions”

In accordance with the procedures in § 1083(c)(2), a “prior action” that was timely

commenced under either § 1605(a)(7) or the Flatow Amendment is eligible to proceed under the

new statute, § 1605A, if three straightforward criteria are satisfied. Specifically, the plaintiff

must demonstrate the prior action: (1) relied on § 1605(a)(7) or the Flatow Amendment as

creating a cause of action, (2) has “been adversely affected on the grounds that either or both of

those provisions failed to create a cause of action against the state,” and (3) as of the date of the

enactment of the 2008 NDAA, the case was “before the court[] in any form, including on appeal

or motion under Rule 60(b) of the Federal Rules of Civil Procedure.” § 1083(c)(2)(A)(ii)–(iv).

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If these requirements are met, then “the action shall, on motion made by plaintiffs to the United

States district court where the action was initially brought, or judgment in the action was

originally entered, be given effect as if the action had originally been filed under section

1605A(c) of title 28, United States Code.” § 1083(c)(2)(A)(iv). This subsection also

contemplates that the plaintiff may chose to “refile” his action, rather than make a motion. See

§ 1083(c)(2)(C).

In another action before this Court, Syria argued recently that plaintiffs who filed actions

under § 1605(a)(7) following the Court of Appeals’ decision in Cicippio-Puleo, or after June 16,

2004, are precluded from taking advantage of § 1083(c)(2) because, as Syria reads the statute,

such plaintiffs could not have reasonably relied on § 1605(a)(7) or the Flatow Amendment, as

Cicippio-Puleo made plain that those provisions do not furnish a cause of action against a

foreign state. See Gates v. Syrian Arab Republic, No. 06-CV-1500-RMC, 2009 WL 2562660

(D.D.C. Aug. 20, 2009) (Collyer, J.). In this Court’s view, however, such an interpretation of

§ 1083(c)(2)(A) is a crabbed reading of the statute, which, if accepted, would frustrate the broad

remedial purposes Congress sought to achieve through the enactment of § 1083. In fact, the

House Conference Report that accompanied § 1083 strongly suggests that Congress envisioned

an expansive retroactive reach for § 1605A as a means to overcome the many setbacks plaintiffs

encountered under § 1605(a)(7) and the Flatow Amendment. That report states: “The provision

would allow any case previously brought under the state sponsor of terrorism exception to the

FSIA under the section 1605(a)(7), or under section 101(c) of Public Law 101-208 [the Flatow

Amendment], and which is still before a court, to be refiled as if the original claim has been filed

under the provisions of this section.” H.R. REP. NO. 110-477, at 1001 (2007) (Conf. Rep.).

Accordingly, this Court construes § 1083(c)(2)(A) broadly, consistent with the remedial

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purposes of the new anti-terrorism enactment, to include actions adversely impacted by Cicippio-

Puleo, regardless of when those actions were filed. For similar reasons, this Court reads the

requirement that the prior actions must be adversely impacted on the grounds that § 1605(a)(7)

and the Flatow Amendment failed to establish a cause of action against a foreign state to include

those instances in which plaintiffs failed to recover punitive damages, a critical component of

these terrorism actions.

2. Section 1083(c)(3) – “Related Actions”

Section 1083(c)(3), the provision concerning “related actions” offers another method by

which certain prior actions may be filed with the Court as new actions under § 1605A.

Specifically, § 1083(c)(3) provides that “[i]f an action arising out of an act or incident has been

timely commenced under section 1605(a)(7) . . . , any other action arising out of the same act or

incident may be brought under section 1605A.” As this Court has recognized in prior decisions,

§ 1083(c)(3) enables plaintiffs who achieved final judgments under the former terrorism

exception, § 1605(a)(7), to pursue new federal causes of action under § 1605A based on the same

prior act or incident. In Bodoff, for example, this Court determined that plaintiff was not entitled

to relief under § 1083(c)(2) because the case was not before the court in any form, but in

reaching that conclusion, this Court emphasized that plaintiff had the right to file a new action,

pursuant to § 1083(c)(3). See 567 F. Supp. 2d 141, 142–43 (D.D.C. 2008) (Lamberth, C.J.).

Thus, § 1083(c)(3) offers an avenue of relief in those cases that reached final judgment some

years prior to the enactment of the 2008 NDAA and therefore are less likely to be “before the

court[] in any form,” as required for treatment on motion under § 1083(c)(2).

Additionally, § 1083(c) allows plaintiffs in a prior action under § 1605(a)(7) to file an

action under the new law, § 1605A, as a related case to any other pending action that was timely

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commenced under § 1605(a)(7) and based on the same terrorist act or incident. In other words,

plaintiffs’ right to proceed under the new section is not tied exclusively to their prior action;

plaintiffs may identify other cases that are pending under § 1605(a)(7) that are based on the same

act or incident.

3. The 60-Day Rule – Filing Deadline for Cases Based on Prior Actions Under Section

1605(a)(7)

No matter how plaintiffs wish to qualify their prior actions under the new terrorism

exception, § 1605A—that is, regardless of whether they seek to do so pursuant to § 1083(c)(2) or

whether they opt to file a new action pursuant § 1083(c)(3)—plaintiffs have only a limited

window of opportunity to elect the benefits of the new statute. Plaintiffs who hope to gain the

benefits of the new law by filing a motion or by refiling pursuant to § 1083(c)(2), must file their

motions “within the 60-day period beginning on the date of the enactment of the [2008 NDAA],”

or no later than March 28, 2008. § 1083(c)(2)(c). Plaintiffs who wish to file a new action as a

related case”—as related to either their own prior action under § 1605(a)(7) or some other case

based on the same act or incident—pursuant to § 1083(c)(3), must do so no later than 60 days

after the entry of judgment in the original action or within 60 days after the date of the enactment

of the 2008 NDAA, whichever is later. § 1083 (c)(3).

4. Section 1083(c)(2)(B) – “Defenses Waived”: Res Judicata, Collateral Estoppel, and

Statute of Limitations Are Deemed Waived to the Extent that those Defenses Relate

to Claims Litigated in a Prior Action Under Section 1605(a)(7)

Subsection § 1083(c)(2)(B), referred to as “Defenses Waived,” purports to limit “[t]he

defenses of res judicata, collateral estoppel, and limitation period” in any new action under

§ 1605A. Specifically, the statute provides that any defense based on either the doctrines of res

judicata or collateral estoppel or the limitation period shall be deemed waived to the extent that

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the new action under § 1605A relies, either in whole or in part, on an earlier terrorism case

brought under the prior version of the terrorism exception, § 1605(a)(7). See § 1083(c)(2)(B).

This waiver applies to cases that are converted to § 1605A on motion, consistent with

§ 1083(c)(2)(A), as well as to any other prior cases that are “refiled under [§] 1605A(c).” In

other words, prior judgments under the state sponsor terrorism exception to the FSIA,

§ 1605(a)(7) are not to be given any preclusive effect in new actions brought under the current

version of the terrorism exception, § 1605A.

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D.

EFFORTS TO OBTAIN RETROACTIVE TREATMENT UNDER

THE NEW TERRORISM EXCEPTION, SECTION 1605A

In view of the language that Congress has included within § 1083(c)—both with respect

to the criteria defining whether a claim is eligible for treatment under the new terrorism section,

§ 1605A, as well as the time limits for electing treatment under the new statute—this Court is not

persuaded by any reading of § 1083 that would have § 1605A apply automatically to prior

terrorism cases under § 1605(a)(7). While some counsel before this Court may have glossed

over the requirements within § 1083(c), it is the duty of this Court “to give effect, if possible, to

every clause and word of a statute.” United States v. Menasche, 348 U.S. 528, 538–39 (1955)

(quotation and citation omitted). This Court presumes that Congress “says in a statute what it

means and means in a statute what it says there.” Conn. Nat’l Bank v. Germain, 503 U.S. 249,

252–54 (1992). These time-honored cannons of statutory construction are particularly critical in

this context because the FSIA terrorism exception is a “delicate legislative compromise” that

balances a host of competing foreign policy considerations. See Price, 294 F.3d at 89. More

fundamentally, however, this Court never presumes that a law applies retroactively; instead,

Congress must clearly instruct courts as to whether and to what extent a new law is to apply to

cases that preceded its enactment. See Plaut, 514 U.S. at 237. In this case, Congress has done

just that by setting forth specific parameters in § 1083(c).

Thus, the framework established by § 1083(c) is the template that this Court must apply

when determining whether prior actions under the old exception for state sponsors of terrorism,

§ 1605(a)(7), are entitled to go forward as new actions under the recently enacted § 1605A with

all the benefits that new section entails. Consistent with § 1083, this Court has held on prior

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occasions that the latest revision of the state sponsor of terrorism exception to sovereign

immunity, § 1605A does not have automatic, retroactive application to cases filed under the

now-repealed § 1605(a)(7). See Kirschenbaum v. Islamic Republic of Iran, 572 F. Supp. 2d 200,

204 n.1 (D.D.C. 2008) (Lamberth, C.J.); Beer, 574 F. Supp. 2d at 5 n.1. Similarly our Court of

Appeals observed recently that failure to adhere to those procedures means that the prior action

remains under § 1605(a)(7), rather than § 1605A, and thus plaintiffs are not entitled to any of the

benefits of the new enactment under those circumstances. See Simon, 529 F.3d at 1192; see also

Oveissi, 573 F.3d 835 (holding that § 1605A provides a federal cause of action for those

plaintiffs who meet the statutory criteria).

Notwithstanding the guidance offered in § 1083(c), as well as recent decisions that have

applied those provisions to prior terrorism cases, it appears to this Court that there is some

degree of confusion among counsel regarding the scope and application of § 1083(c) to FSIA

cases that were previously filed against Iran under the former version of the terrorism exception,

§ 1605(a)(7). In their efforts to avail themselves of the new provision, § 1605A, counsel for

plaintiffs in many of these prior actions have taken a variety of different approaches, as

§ 1083(c) contemplates, but some attorneys have pursued seemingly conflicting tactics. For

instance, some attorneys have invoked (c)(2) as well as (c)(3) in their efforts to qualify a single

earlier action under § 1605A. Perhaps this sort of move should be viewed by the Court as

something of a “belt and suspenders” approach that has been taken out an abundance of caution.

Other attorneys have relied on § 1083(c)(3) exclusively, by filing new complaints that assert the

right to now pursue a federal cause of action under § 1605A. Many of the new complaints,

however, do little more than regurgitate the very same state tort law claims that plaintiffs

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litigated in prior FSIA terrorism actions in accordance with the Cicippio-Puleo precedent under

§ 1605(a)(7).

Numerous other attorneys have missed the filing deadlines imposed by the 2008 NDAA,

and thus it appears that these individuals were laboring under the false assumption that § 1083 of

the 2008 NDAA made the new terrorism exception applied automatically to their terrorism cases.

As will be discussed in the analysis that follows, at least one attorney claims that his reading of

§ 1083 led him to conclude that § 1605A applied retroactively to his cases. Other attorneys have

not claimed as much, but they have filed motions that appear to rest on the erroneous assumption

that § 1083 somehow makes § 1605A retroactive to any cases under § 1605(a)(7) that were

pending as of the date § 1605A was enacted. For instance, this Court recently denied several

motions requesting that this Court provide for payment to the special masters who assisted this

Court with the determination of damages in the large consolidated action of Peterson v. Islamic

Republic of Iran. See No. 01-CV-2094-RCL (D.D.C.), Dk. # 430. While § 1605A now includes

a provision enabling special masters in FSIA terrorism cases to receive payment for their

services in certain instances, see § 1605A(e), no similar entitlement exists for actions like

Peterson, which remain under § 1605(a)(7). Counsel in Peterson never addressed the

retroactivity issues; it appears that they simply presupposed that any relief included in the new

law, § 1605A, applied automatically to their case. As counsel failed to follow the procedures in

'1083(c), this Court had to deny those motions seeking payment of the special masters.

In sum, there is in this Court’s view, a good deal of confusion regarding how parties

should avail themselves of the benefits of the new statute. Having to deny relief to so many

plaintiffs is particularly regrettable in light of the fact that the recent reforms to the FSIA, as

enacted through § 1083, are plainly intended to help these victims of terrorism. It is therefore the

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hope of this Court that today’s decision and the articulation of the statutory framework of

§ 1083(c) may lend greater clarity to this area for counsel prosecuting these important actions.22

It should be noted at the outset that there are both winners and losers in today’s omnibus opinion.

While a number of cases have not obtained retroactive treatment under the new terrorism statute,

many in fact have. At this juncture, however, guidance from this Court across this range of cases

should lend the greatest degree of clarity to these matters for the benefit of all plaintiffs, and that

in turn should help facilitate litigation going forward. The bottom line is that there should no

more confusion, guesswork, or misguided notions regarding the retroactive application of

§ 1605A. If counsel for plaintiffs in these action have in good faith misunderstood or misapplied

§ 1083(c) to their respective actions—and are time-barred from taking advantage of the new state

sponsor of terrorism exception—then they may consider filing a motion for relief under Rule 60

and consistent with the guidance provided by the Court in Part G of this opinion.

22

This is not to say that all counsel with cases pending against Iran in this Court have

failed to adhere to procedures set forth in § 1083(c). That is certainly not the case. Some

attorneys have managed to get it right, and this Court has recently granted a number of motions

permitting prior actions under § 1605(a)(7) to go forward under § 1605A. See, e.g., Spencer v.

Islamic Republic of Iran, 06-CV-750-RCL (D.D.C.), Dk. # 20; Heiser v. Islamic Republic of

Iran, 00-CV-2329-RCL (D.D.C.), Dk. #143. As noted supra, p. 47, this Court issues a separate

opinion today in Heiser in which this Court analyzes new claims for both compensatory and

punitive damages under § 1605A. As the Court has determined that plaintiffs are entitled to

relief under the new statute, the Court will also enter a judgment for plaintiffs in Heiser pursuant

to § 1605A.

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E.

EXAMINATION OF SECTION 1083(c) OF THE 2008 NDAA UNDER

ARTICLE III OF THE UNITED STATES CONSTITUTION

Before proceeding any further, however, there is a critical threshold matter that this Court

must address and that is the question of whether § 1083(c) directs the reopening of final

judgments in violation of Article III of the United States Constitution. See Plaut, 514 U.S. at

241; see also Miller v. French, 530 U.S. 327, 344 (2000). In this instance, the Court is troubled

by the related-case provisions of § 1083(c)(3), to the extent that those measures enable

individuals who litigated FSIA actions against Iran previously to now file new cases against Iran

under § 1605A. For similar reasons, the Court is troubled by § 1083(c)(2)(B) (“Defenses

Waived”) which directs that in any new action under § 1605 courts must deem as waived “[t]he

defenses of res judicata and collateral estoppel” with respect to any claims that were brought

previously under § 1605(a)(7). The question presented is whether these particular legislative

enactments abrogate final judgments in a manner that the Supreme Court has determined is

“repugnant to the text, structure, and traditions of Article III.” Plaut, 530 U.S. at 217–18. As no

court has had the opportunity to address this issue, it now confronts this Court as a substantial

question of first impression, and one of great and immediate consequence to hundreds of

plaintiffs who have filed new actions against Iran consistent with the related-case procedures of

§ 1083(c).

Examining the constitutionality of an act of Congress requires a journey into treacherous

waters, to say the least. It is at these times that a mere district judge would prefer to take refuge

in the doctrine of “constitutional avoidance” or “constitutional doubt” rather than engage in a

confrontation on such fundamental matters. See, e.g., Boumediene v. Bush, 128 S. Ct. 2229, 271

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(2008); French, 530 U.S. at 341; Nat’l Mining Ass’n v. Kempthorne, 512 F.3d 702, 711 (D.C.

Cir. 2008); Citizens for Responsibility and Ethics in Washington v. U.S. Dep’t of Homeland Sec.,

592 F. Supp. 2d 127 (D.D.C. 2009) (Lamberth, C.J.). Consistent with this cardinal rule of

statutory construction, courts are obligated to construe legislative enactments in a manner that

avoids constitutional questions whenever there is a saving construction that is “not plainly

contrary to the intent of Congress.” French, 530 U.S. at 341 (quoting Edward J. DeBartolo

Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1985)).

Regrettably, the constitutional question is presented squarely and unavoidably in this

case. The import of § 1083(c)(3) and § 1083(c)(2)(B) could not be clearer: An individual who

received a final judgment in a prior case against Iran, under an earlier version of the FSIA state

sponsor of terror exception, § 1605(a)(7), is now permitted to file a new action against Iran under

the current version of the terrorism exception, § 1605A. Moreover, this Court is instructed that it

may not give any preclusive effect to its prior judgment, even though the prior action was based

on the very same act or incident. Thus, there is a legitimate question of whether this enactment

offends deeply entrenched constitutional principles relating to the separation of powers and the

ability of the judiciary to function independently without interference from the political process.

See, e.g., United States v. Klein, 80 U.S. 128, 147 (1871) (emphasizing that the powers afforded

to the Congress and the Courts under the Constitution must be kept separate and distinct). This

Court must not shirk from its duty, where, as here, the question of the constitutional validity of

an act of Congress is starkly presented. French, 530 U.S. at 341 (quoting Commodity Futures

Trading Comm’n v. Schor, 478 U.S. 833, 841 (1986))); see also Boumediene, 128 S. Ct. at 2271

(“We cannot ignore the text and purpose of a statute in order to save it.”); Citizens for

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Responsibility and Ethics in Washington, 592 F. Supp. 2d at 131 (“[I]n the absence of statutory

ambiguity the constitutional avoidance doctrine has no place.”).

There are other important considerations that militate in favor of this Court addressing

the constitutional question in this case. More than a decade ago when this Court first considered

the “novel enactments” of the FSIA terrorism exception, § 1605(a)(7) and the Flatow

Amendment, § 1605 note, this Court underscored its “special role in the development of foreign

sovereign immunity jurisprudence.” Flatow I, 999 F. Supp. at 6 (citing 28 U.S. C. 1391 (f)(4))

(providing that this Court is a designated venue for actions brought against a foreign state or

political subdivision thereof”). Consistent with this role, this Court undertook in Flatow “a

systemic review of the dispositive legal issues,” including a number of constitutional issues, in

an effort to ensure that the plaintiff was fully entitled to relief under the law. Id. The plaintiffs

before the Court today certainly deserve no less. In light of the substantial personal, financial,

and emotional investments that these victims have made in these cases over the years, this Court

simply cannot afford to overlook potential legal infirmities that could prove fatal to their cause.

Thus, similar to Flatow, and consistent with this Court’s historical role in the development of

jurisprudence under the FSIA, this Court should examine carefully whether the latest terrorism

exception, § 1605A, can be applied retroactively to cases that were litigated to a final judgment

under § 1605(a)(7) in a manner that comports with Article III of the Constitution.

More fundamentally, however, the Court is mindful that these FSIA actions under the

state sponsor of terror exception involve a handful of rogue nations, who, like Iran, have had an

extremely rocky relationship with the United States. On the other side of this difficult problem,

are hundreds of victims of international terrorism who have long suffered, and who desperately

hope to see Iran held accountable for its role in perpetuating terrorist acts that have destroyed

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countless lives. In this highly charged and inevitably political context—and especially where the

offending nation is in default—this Court needs to be extremely leery of overreaching by

Congress. It is also out of respect for the principle of comity between nations that this Court

must assure itself that any lawsuit against a foreign power, no matter how unpopular that foreign

sovereign may be, is an action that comports with our Constitution.23 It is precisely at these

challenging moments that our Courts must be ever vigilant to uphold the rule of law and take full

stock of our Article III responsibility “to say what the law is.” Marbury v. Madison, 5 U.S. 137,

177 (1803).

In candor, this Court is not the first to observe that certain parts of § 1083(c) might suffer

from constitutional infirmities in violation of the principles expounded by the Supreme Court in

its jurisprudence concerning the independent authority of Article III courts to decide civil cases.

The potential infirmities analyzed here were first noted by Jennifer Elsea in the report she

authored for the Congressional Research Service. See SUITS AGAINST TERRORIST STATES, supra

note 4, at 61.24 The issue presented here today is troubling, but, this Court is of the view that

§ 1083(c)(3) and § 1083(c)(2)(B) withstand constitutional scrutiny.

23

By working from the general proposition that foreign sovereigns should be immune

from suit in our courts, see § 1604, the FSIA builds from the principle of comity among nations.

Moreover, this time-honored principle is reinforced throughout the FSIA. Even in cases in

which a foreign state is in default, the Court may not enter judgment unless the plaintiff

“establishes his claim or right to relief by evidence satisfactory to the court.” 28 U.S.C. §

1608(e).

24

The Court’s analysis of the Article III question is limited to the procedures for related

actions in § 1083(c)(3). Specifically not considered are the procedures for prior actions in

§ 1083(c)(2). For the sake of argument, this Court assumes that § 1083(c)(2) does not raise any

constitutional issues under Article III because that subsection reaches only those cases that were

“before the court[] in any form” at the time of the enactment of the 2008 NDAA. As will be

discussed in further detail in this part of the opinion, the Supreme Court has made clear that

Article III is not offended when courts are directed to apply changes in the law to pending cases,

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1. Principles of Law – The Independence of the Federal Judiciary Under Article III

and the Finality of Judgments

More than two centuries of Supreme Court jurisprudence has reinforced the basic

understanding that the Federal Judiciary has sole responsibility for deciding cases and

controversies arising under the federal law. See, e.g., Hayburn’s Case, 2 U.S. 408 (1792); Klein,

80 U.S. 128; Plaut, 514 U.S. 211. As Justice Scalia observed in Plaut:

including those on direct appeal. See Plaut, 514 U.S. at 227. Thus, to the extent that

§ 1083(c)(2) reaches cases that were in fact “pending” under § 1605(a)(7) at the time the new

terrorism exception was enacted, the constitutional issue regarding the finality of Article III court

judgments is not implicated. The problem, however, is that it is not entirely clear what

constitutes the range of cases that might qualify as “pending cases” for Article III purposes, as it

was not necessary for the Supreme Court to fully explore this issue in Plaut.

The Court’s opinion in Plaut strongly suggests that a “pending case” under Article III is

one that is simply awaiting either the entry of a final judgment in district court or the outcome of

a direct appeal. See id. If this common sense definition is applied here, then § 1083(c)(2), much

like § 1083(c)(3), might also present some constitutional concerns. Section 1083(c)(2) provides

that cases that were “before the courts in any form, including on appeal or motion under rule

60(b) of the Federal Rules of Civil Procedure” may be eligible for treatment under the new law.

See § 1083(c)(2)(A)(iv) (emphasis added). While the broad categorization of “in any form”

undoubtedly includes cases that are actually “pending” consistent with Plaut, it may also reach

back to closed cases that just happen to be before the court in some form because of ongoing

litigation relating to efforts to enforce the judgment. In this default context involving Iran, it is

not uncommon for the Court to preside over extensive postjudgment litigation with respect to

efforts to enforce judgments. The Peterson action is a prime example. See No. 01-CV-2094,

Dk. # 434 (Memorandum Opinion and Order denying motions to appoint receivers for various

Iranian assets); Bennett, 604 F. Supp. 2d 152 (granting motion to quash five writs of attachment

issued against the property that once comprised the Iranian embassy here in Washington, DC).

This Court is satisfied, however, that it need not subject § 1083(c)(2) to scrutiny under

Article III because the Court finds today that even § 1083(c)(3)—which has far greater

retroactive reach than § 1083(c)(2)—does not offend the principle of the finality of court

judgments. Consequently, if there is no Article III problem with the related-actions procedures

of § 1083(c)(3), which enable a plaintiff to file as a new action under § 1605A a case that was

previously closed under § 1605(a)(7), and which was not “pending” before this court in any

sense when the 2008 NDAA was enacted, then, a fortiori, the procedures in § 1083(c)(2)

concerning prior actions that are still before the court in some form must also withstand scrutiny.

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The record of history shows that the Framers crafted this charter of the judicial

department with an expressed understanding that it gives the Federal Judiciary the

power, not merely to rule on cases, but to decide them, subject to review only by

superior courts in the Article III hierarchy—with an understanding, in short, that

“a judgment conclusively resolves the case” because “‘a judicial power’” is one to

render dispositive judgments.

Plaut, 514 U.S. at 218–19 (quoting Frank J. Easterbrook, Presidential Review, 40 CASE W. RES.

L. REV. 905, 926 (1990)) (emphasis in original). Thus, a case submitted to the federal judiciary

and resolved in a final judgment is settled conclusively and may not be reversed, undone, or

otherwise revisited as a result of subsequent actions taken by the political branches.

In Hayburn’s Case, five out the six Supreme Court justices, while sitting in their

capacities as circuit judges, considered a federal statute that gave the Secretary of War complete

discretion to either accept or reject Circuit Court findings regarding the appropriate amounts of

pensions owed to Revolutionary War Veterans. The Justices explained in a recorded opinion

how they each found that the statute violated the separation of powers established by the

Constitution. The Justices noted that the statute allowed for court judgments to be “revised and

controlled by the legislature, and by an office in the executive department,” a practice “deemed

radically inconsistent with the independence of that judicial power which is vested in the courts.”

2 U.S. at 410.

Following the Civil War, the Supreme Court decided the Klein case in which the Court

rejected an effort by the Congress to “prescribe rules of decision to the Judicial Department of

the Government in cases pending before it.” 80 U.S. at 146. At issue in Klein was a measure by

Congress intended to direct the outcome in certain cases brought by former confederates who

sought compensation for property that was either captured by the United States Government or

abandoned during the course of the War. Congress had originally provided, by statute, that such

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cases would be decided by the Court of Claims. The right to recovery depended on proof to the

satisfaction of the court demonstrating that the claimant both owned the property at issue and had

not supported the rebellion in any way. Id. at 131. In deciding such cases, the Court of Claims

determined that a presidential pardon was sufficient to cure claimants of their participation in the

rebellion. Id. at 132–33. The Supreme Court expressly affirmed that principle, holding that the

pardon showed the claimant “was innocent in law as though he had never participated [in the

rebellion], and that his property was purged of whatever offence he had committed and relieved

of any penalty that he might have occurred.” Id. at 133 (citing United States v. Padelford, 76

U.S. 531 (1870)).

Shortly thereafter, Congress sought to abrogate the Supreme Court’s ruling. Congress

passed a new statute providing that the courts were no longer permitted to consider a pardon as

evidence curing a claimant of his participation in the rebellion. Id. at 133–34. Instead, courts

were instructed to deem the pardon as conclusive proof that the claimant had supported the

rebellion, and, moreover, once proof of a claimant’s pardon was furnished by either party, the

Court would cease to have jurisdiction over the case and was therefore required to dismiss the

action accordingly. Id. at 134.

In holding that Congress had exceeded its authority under the Constitution, the Supreme

Court stated:

We must think that Congress has inadvertently passed the limit which

separates the legislature from the judicial power.

It is of vital importance that these powers be kept distinct. The

Constitution provides that the judicial power of the United States shall be vested

in one Supreme Court and such inferior courts as the Congress shall from time to

time ordain and establish.

. . .

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Congress has already provided that the Supreme Court shall have

jurisdiction of the judgments of the Court of Claims on appeal. Can it prescribe a

rule in conformity with which the court must deny to itself the jurisdiction thus

conferred, because and only because its decision, in accordance with settled law,

must be adverse to the Government and favorable to the suitor. The question

seems to answer itself.

The rule prescribed is also liable to just exception as impairing the effect

of a pardon, and thus infringing on the constitutional power of the Executive.

Id. at 147.

The precise meaning of Klein is subject to much debate in part because the Court’s

decision appears to rest as much on the principle that Congress cannot nullify the President’s

authority under Article II as much as it is based on any sense that the Congress had interferred

with the Judicial Department’s authority to independently decide cases under Article III. See

generally ERWIN CHEMERINSKY, FEDERAL JURISDICTION 183–88 (3d ed. 1999); see also Nat’l

Coalition to Save Our Mall v. Norton, 269 F.3d 1092, 1096–1098 (D.C. Cir. 2001) (noting that

“Klein’s exact meaning is far from clear” and discussing differing interpretations). While the

full implications of Klein will likely be subject to debate for years to come, the Supreme Court

has recognized that, at a minimum, Klein stands for the proposition that Congress cannot dictate

a rule of decision to courts in pending cases without amending the underlying substantive law.

Plaut, 514 U.S. at 218 (“Whatever the precise scope of Klein, however, later decisions have

made clear that its prohibition does not take hold when Congress ‘amend[s] applicable law.’”)

(quoting Robertson v. Seattle Audobon Soc’y, 503 U.S. 429, 441 (1992)); accord French, 530

U.S. at 349.

The Supreme Court has decided two cases in which it has considered federal statutes that

waived res judicata and collateral estoppel in civil actions. See United States v. Sioux Nation,

448 U.S. 371 (1980); Cherokee Nation v. United States, 270 U.S. 476 (1926). Both cases,

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however, concerned a waiver of those preclusion defenses by the United States Government in

ongoing litigation with Indian tribes. Neither of those decisions required the Court to examine

whether or to what extent Congress may pass a statute waiving res judicata or collateral estoppel

as defenses by parties other than the Federal Government, such as private litigants or foreign

governments, and the Court did not express any views on the matter.

In Cherokee Nation, the Court reviewed the passage of a special act by Congress that

permitted the Court of Claims to adjudicate Cherokee claims against the United States

Government that were previously considered in a prior action that the Court had decided several

years earlier. 270 U.S. at 485–86. In declining to give res judicata effect to the prior

adjudication, the Court stressed that Congress has the authority to deem the prior judgment as

waived in actions against the Federal Government. Id. at 486.

More than half a century later, the Court considered a similar issue in the case of Sioux

Nation. The Sioux alleged that their ouster from the Black Hills of South Dakota by the United

States during the late 1800s amounted to a taking under the Fifth Amendment for which just

compensation was due. See 448 U.S. at 384. The question was subject to considerable litigation

over a period of several decade, and Congress consistently passed legislation in an effort to help

the Indians press their claim against the federal government. At each step of the way, the Sioux

Indians were opposed in litigation by the Executive Branch.

At the end of the first wave of litigation in 1942, the Court of Claims first ruled against

the Indians on the merits, holding that the Sioux had merely presented “a moral claim not

protected by the Just Compensation Clause.” Id. at 384. Subsequent to that decision, Congress

established the Indian Claims Commission, which again considered the Sioux Indians’ Takings

Clause claim regarding the Black Hills and ultimately decided the question in favor of the

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Indians. Id. at 384–85. The Federal Government then appealed the Commission’s ruling to the

Court of Claims. Id. Without reaching the merits, the Court of Claims ruled that the Sioux

Indians’ claim against the Federal Government was barred by the res judicata effect of the

Court’s 1942 decision. Shortly after the Court’s ruling, Congress passed special legislation

directing the Court of Claims to reconsider the Takings Clause question de novo and without

regard to the defenses of res judicata and collateral estoppel. See id. at 390. Following that

special enactment by Congress, the Court of Claims promptly reconsidered the Sioux Indian case

on the merits and found in favor the Indians. Id. at 380–390. The Supreme Court granted the

Federal Government’s petition for certiorari.

In a lengthy opinion, the Supreme Court considered carefully whether Congress has

“inadvertently passed the limit which separates the legislative from the judicial power” by

directing the Court of Claims to reconsider the Sioux Indians’ taking case. Id. at 392 (quoting

Klein, 80 U.S. at 147). In holding that Congress had not encroached on the independent powers

of the Judiciary under Article III, the Court relied heavily—if not exclusively—on its prior

decision in Cherokee Nation. The Court stated:

The Holding in Cherokee Nation that Congress has the power to waive the

res judicata effect of a prior judgment entered in the Government’s favor on a

claim against the United States is dispositive of the question here. Moreover, that

holding is consistent with a substantial body of precedent affirming the broad

Constitutional power of Congress to define and “to pay the Debts . . . of the

United States.” U.S. CONST. art. I., § 8, cl. 1. That precedent speaks directly to

the separation-of-powers objections discussed above.

Sioux Nation , 448 U.S. at 397. The Court emphasized, that consistent with Cherokee

Nation, numero

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