Wyatt v. Syrian Arab Republic

In the

United States Court of Appeals

For the Seventh Circuit

____________________

Nos. 14-3327 and 14-3344

MARY NELL WYATT, individually and as Executrix of the Es-

tate of RONALD E. WYATT, et al.,

Plaintiffs-Appellants,

v.

SYRIAN ARAB REPUBLIC, et al.,

Defendants,

and

FRANCIS GATES, et al.,

Third-Party Defendants-Appellees.

____________________

FRANCIS GATES, et al.,

Plaintiffs-Appellees,

v.

SYRIAN ARAB REPUBLIC, et al.,

Defendant,

v.

MARY NELL WYATT, et al.,

Claimants-Appellants.

2 Nos. 14-3327 and 14-3344

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division

Nos. 11 C 8715 and 14 C 6161 — Virginia M. Kendall, Judge.

____________________

ARGUED MAY 20, 2015 — DECIDED AUGUST 31, 2015

____________________

Before BAUER, FLAUM, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge. These appeals address attempts

to execute final judgments against the nation of Syria ob-

tained by two groups of United States victims of Syrian

state-sponsored terrorism. Both groups of victims have won

judgments under the Foreign Sovereign Immunities Act.

Both seek to satisfy their judgments by seizing the same Syr-

ian assets located in the Northern District of Illinois.

We affirm the actions of the district court, which ordered

the assets disbursed to the appellees, whom we refer to as

the Gates plaintiffs. The legal issue we decide on the merits

is that plaintiffs who win judgments in state-sponsored ter-

rorism cases against foreign governments under 28 U.S.C.

§ 1605A, and who seek to attach property under § 1610(g),

are not required to comply with the notice requirement of

§ 1608(e) before executing their judgments. The Foreign Sov-

ereign Immunities Act contains extensive procedural protec-

tions for foreign sovereigns in United States courts, but Con-

gress has amended the Act to cut back some of those protec-

tions in cases of state-sponsored terrorism. Before dealing

with the merits of this issue at the end of this opinion, how-

Nos. 14-3327 and 14-3344 3

ever, we must first deal with a complex procedural history

and several jurisdictional challenges.

To explain, we begin by introducing the legal framework

for remedies for state-sponsored terrorism under the Foreign

Sovereign Immunities Act, the parties and their claims, and

the involved procedural history of these appeals. We then

address challenges to our jurisdiction and conclude by ad-

dressing the merits of these appeals.

I. Legal, Factual, and Procedural Background

A. Terrorism and the Foreign Sovereign Immunities Act

The default rule of United States law is that foreign states

are immune from suit and attachment of assets in United

States courts, but the Foreign Sovereign Immunities Act

(FSIA) provides a number of exceptions and special proce-

dures for such cases. The FSIA is comprehensive, so all cases

against foreign sovereigns must be fitted into its statutory

framework. Republic of Argentina v. NML Capital, Ltd., 573

U.S. —, 134 S. Ct. 2250, 2255–56 (2014); Gates v. Syrian Arab

Republic, 755 F.3d 568, 571 (7th Cir. 2014) (earlier appeal in-

volving same Syrian assets at issues in these appeals).

The FSIA now contains provisions specific to claims for

state-sponsored terrorism. Section 1605A removes sovereign

immunity in actions for money damages for personal injury

or death resulting from an act of state-sponsored terrorism.

28 U.S.C. § 1605A. Once plaintiffs obtain a judgment under

§ 1605A, they may proceed to attach assets to execute that

judgment under § 1610. Subsection § 1610(g) allows plain-

tiffs with a judgment against a state sponsor of terrorism to

attach and execute the judgment against property of the for-

4 Nos. 14-3327 and 14-3344

eign state itself and any agency and instrumentality of the

state.

Other provisions of § 1610 establish the more general

process for executing a judgment against a foreign state in

suits other than those for state-sponsored terrorism, such as

more ordinary contract or tort cases arising out of a foreign

state’s commercial activities. Subsections 1610(a) and (b) de-

scribe the property of foreign states that is generally subject

to attachment to satisfy a judgment. Subsection 1610(c) de-

lays attachment and execution under § 1610(a) and (b) until

a court determines that a reasonable period of time has

elapsed following the entry of judgment. Subsection 1610(c)

also requires compliance with § 1608(e), which directs a

plaintiff who obtains a default judgment to serve the foreign

state with a copy of the judgment in a specific manner.

The interplay of these more general provisions and the

special provisions for state-sponsored terrorism are at the

center of the dispute between these two groups of victims. In

Gates, we described the perhaps unintended consequences of

this statutory scheme in previous appeals by a third group of

victims seeking the same assets in dispute here:

[T]he FSIA does not provide a mechanism for

distributing equitably among different victims

any Syrian assets in the United States that are

subject to attachment. Instead, victims who fi-

nally obtain judgments must then engage in

the costly, burdensome, and often fruitless task

of searching for available assets.

These victims of terror can then find them-

selves pitted in a cruel race against each oth-

Nos. 14-3327 and 14-3344 5

er—a race to attach any available assets to sat-

isfy the judgments. The terms of the race are

essentially winner-take-all rather than any eq-

uitable sharing among victims of similar losses.

Under the FSIA’s compensation scheme, a ter-

rorism judgment against Syria can be satisfied

only at the expense of other terrorism victims.

Gates, 755 F.3d at 571.

B. The Gates Plaintiffs

In both of these appeals, the appellees are the Gates

plaintiffs. They are defending the district court’s decision to

release confiscated Syrian funds to them to satisfy their

judgment. The Gates plaintiffs are relatives of Olin Eugene

“Jack” Armstrong and Jack L. Hensley. Hensley and Arm-

strong were kidnapped in September 2004 by al-Qaeda

when the two men were working as contractors in Iraq for

the U.S. military. They were gruesomely murdered, and the

killings were captured on a video that was made public by

al-Qaeda. The Gates plaintiffs sued Syria under the FSIA for

sponsoring al-Qaeda’s terrorism. (Syria has been on the list

of state sponsors of terrorism since the list was created in

1979.)

On September 26, 2008, the Gates plaintiffs obtained a

default judgment in the United States District Court for the

District of Columbia for $413 million against Syria. A month

later, on October 23, the court clerk sent a copy of the default

judgment to the Syrian Foreign Ministry via a private deliv-

ery service, but the delivery was rejected and the delivery

agent was told “the shipment is no longer required.” The

6 Nos. 14-3327 and 14-3344

next day, Syria filed a notice of appeal challenging the dis-

trict court’s personal jurisdiction over Syria.

While that appeal was pending, the Gates plaintiffs

sought to take steps to execute their judgment against Syria.

The Wyatt plaintiffs, who had filed their own suit against

Syria, moved to intervene in the Gates case in the District of

Columbia, asserting a prior claim on Syrian assets in the Dis-

trict of Columbia because they had filed their suit earlier.

The district court stayed enforcement of the Gates judgment

pending appeal and denied as moot the Wyatt motion to in-

tervene.

On May 20, 2011, the United States Court of Appeals for

the District of Columbia Circuit found personal jurisdiction

proper and affirmed the district court’s default judgment in

favor of the Gates plaintiffs. Gates v. Syrian Arab Republic, 646

F.3d 1, 5 (D.C. Cir. 2011). The Gates plaintiffs then filed a mo-

tion in the District of Columbia district court for a § 1610(c)

order authorizing them to enforce their judgment because a

“reasonable time” had passed after entry of judgment and

notice to Syria. 28 U.S.C. § 1610(c). The district court agreed

that § 1610(c) had been satisfied and authorized the Gates

plaintiffs to proceed to attachment and execution of the

judgment.

C. The Wyatt Plaintiffs

In both of the current appeals, the appellants are the Wy-

att plaintiffs. They are also victims of terrorism sponsored by

Syria. They are the relatives of Ronald Wyatt and Marvin T.

Wilson, two biblical archaeologists who were captured in

Turkey in August 1991 by armed members of the Kurdistan

Workers’ Party (PKK), a militant Kurdish organization. The

Nos. 14-3327 and 14-3344 7

two men were held in captivity for 21 days under harsh con-

ditions and in constant fear for their lives. The Wyatt plain-

tiffs sued the Syrian government for sponsoring PKK terror-

ism.

Over a year after the District of Columbia Circuit af-

firmed the Gates judgment, the Wyatt plaintiffs obtained on

December 17, 2012 a default judgment against Syria in the

United States District Court for the District of Columbia for

$338 million. The district court ordered the Wyatt plaintiffs

to serve a copy of the default judgment on Syria pursuant to

28 U.S.C. § 1608(e). Syria appealed the judgment, and the

Wyatt plaintiffs cross-appealed, arguing that service under

28 U.S.C. § 1608(e) was unnecessary because Syria had par-

ticipated actively in the litigation and obviously knew of the

default judgment. On January 30, 2014, the United States

Court of Appeals for the District of Columbia Circuit af-

firmed the judgment against Syria and rejected the Wyatt

plaintiffs’ cross-appeal, holding that § 1608(e) is a “clear and

unambiguous statute” that required service of the default

judgment. Wyatt v. Syrian Arab Republic, 554 Fed. App’x 16,

17 (D.C. Cir. 2014) (mem).

To comply with 28 U.S.C. § 1608(e), the Wyatt plaintiffs

then served a copy of the judgment on the Syrian govern-

ment, which had already appealed the same judgment. The

Wyatt plaintiffs then sought a § 1610(c) order from the Dis-

trict of Columbia district court to authorize them to enforce

their judgment because a “reasonable time” had passed. On

May 19, 2014, that court ruled that the Wyatt plaintiffs had

complied with § 1610(c) and authorized them to proceed to

attachment and execution of the judgment.

8 Nos. 14-3327 and 14-3344

D. The Northern District of Illinois Litigation

In the meantime, however, while the Wyatt plaintiffs had

still been seeking a final judgment and § 1610(c) order in the

District of Columbia, the Gates plaintiffs had taken steps to

execute their judgment against Syrian assets. They subpoe-

naed the Office of Foreign Assets Control in the U.S. Treas-

ury Department to identify Syrian assets in the United States

that could be attached to satisfy their judgment. The Office

responded under a protective order and told the Gates plain-

tiffs that some Syrian assets were located in the Northern

District of Illinois.

1. Procedural History of Appeal No. 14-3344

The Gates plaintiffs registered their judgment from the

District of Columbia action with the district court in the

Northern District of Illinois as case No. 11-cv-8715 and

served a citation to discover assets on JP Morgan Chase

Bank. The bank identified responsive accounts belonging to

agencies and instrumentalities of Syria that were held by the

bank itself and by AT&T. See 28 U.S.C. § 1610(g) (authorizing

the attachment of and execution of a judgment against “the

property of an agency or instrumentality” of a state liable for

sponsoring terrorism). The Gates plaintiffs responded by

serving AT&T with a citation to discover assets and pursued

other responsive accounts at JP Morgan Chase Bank.

The Gates plaintiffs litigated for two years in Illinois

seeking a court order granting them the Syrian funds to sat-

isfy their judgment. Part of that litigation was defending the

priority of their claim against a competing claim by the

Baker plaintiffs, another group of victims of terrorism seek-

ing to satisfy their own judgment against Syria. The Baker

Nos. 14-3327 and 14-3344 9

plaintiffs intervened in the Gates suit in 2012. The district

court ruled that the Gates plaintiffs had priority over the

Baker plaintiffs and issued two turnover orders. A May 13,

2013 order directed the release of the funds held by AT&T,

and a February 3, 2014 order directed the release of the

funds held by JP Morgan Chase. The Baker plaintiffs ap-

pealed those orders to this court. On June 18, 2014, we issued

an opinion affirming both of the district court’s turnover or-

ders. Gates, 755 F.3d 568.

The Gates plaintiffs promptly moved for an order direct-

ing the clerk of the Northern District of Illinois to release the

assets to them. Two days later, on August 17, 2014, the Wyatt

plaintiffs took their first action regarding the Gates lawsuit

in Illinois. The Wyatt plaintiffs filed not a motion to inter-

vene but a memorandum of opposition contesting the Gates

plaintiffs’ right to the assets. The Gates plaintiffs moved to

strike the filing. The district court held a hearing and on Oc-

tober 22, 2014 granted the Gates plaintiffs’ motion to release

funds. The Wyatt plaintiffs’ appeal of that order was docket-

ed as No. 14-3344.

2. Procedural History of Appeal No. 14-3327

On August 11, 2014, the Wyatt plaintiffs had also filed a

separate action in the Northern District of Illinois, No. 14-cv-

6161. They named Syria as the defendant and the Gates

plaintiffs as third-party defendants. In that action, the Wyatt

plaintiffs registered their judgment from the District of Co-

lumbia action and served a citation to discover assets on the

clerk of court for the Northern District of Illinois. (By that

time, JP Morgan Chase and AT&T had placed the disputed

funds in the district court’s registry.) The Wyatt plaintiffs al-

so moved for the turnover and release of the assets. The

10 Nos. 14-3327 and 14-3344

Gates plaintiffs moved to dismiss the complaint for failure to

state a claim and lack of jurisdiction. Also on October 22,

2014, the district court dismissed the Wyatt plaintiffs’ com-

plaint. The court also denied the Wyatt plaintiffs’ motion to

stay that decision a few weeks later. The Wyatt plaintiffs’ ap-

peal of those orders was docketed as No. 14-3327.

II. Jurisdiction

Jurisdiction is a threshold issue that we must address be-

fore discussing the merits. India Breweries, Inc. v. Miller Brew-

ing Co., 612 F.3d 651, 657 (7th Cir. 2010). We first explain why

we have jurisdiction to hear these appeals and then why the

district court had jurisdiction to enter the orders the Wyatt

plaintiffs ask us to review.

A. Appellate Jurisdiction

The Gates plaintiffs challenge on two grounds our juris-

diction to hear these appeals. First, they argue the Wyatt

plaintiffs had no right to challenge the turnover order

awarding the assets to the Gates plaintiffs. This argument

challenges our jurisdiction to hear appeal No. 14-3344. Sec-

ond, the Gates plaintiffs argue that both appeals are moot

because we have no power to order a meaningful remedy.

We address these arguments in turn.

1. Right of Wyatt Plaintiffs to Challenge the Turnover

Order

The Gates plaintiffs maintain that we do not have juris-

diction over No. 14-3344 because the Wyatt plaintiffs never

properly became, or tried to become, parties to the case in

the district court, so that they have no right to appeal the or-

der releasing the funds. The Gates plaintiffs complain that

the Wyatt plaintiffs flouted the Federal Rules of Civil Proce-

Nos. 14-3327 and 14-3344 11

dure by failing to apply for intervention under Rule 24,

which requires a party seeking intervention to file a timely

motion stating the grounds for intervention, accompanied by

a pleading setting forth the claim. Without a motion to inter-

vene, say the Gates plaintiffs, the Wyatt plaintiffs never be-

came parties to the Gates action and cannot appeal the order

in that case.

The Wyatt plaintiffs respond that the Gates action in Illi-

nois sought to attach Syrian assets to execute the final judg-

ment of another federal court, so their ability to participate

should be governed by Illinois law. Federal Rule of Civil

Procedure 69(a) provides that attachment and execution

procedures to satisfy a federal judgment “must accord with

the procedure of the state where the court is located, but a

federal statute governs to the extent it applies.” The Wyatt

plaintiffs contend they were not required to intervene to as-

sert their claim to the Syrian assets.

Intervention is ordinarily the proper path to assert rights

in a federal civil case to which one is not yet a party. There

are a few exceptions to that general rule, however. In enter-

taining the appeal of a law firm challenging distribution of

fees out of a class settlement, we held the firm was a party

even though it never intervened: “Intervention isn’t the only

route for becoming a party. Nonparties in a trial court can

participate as parties to the appeal without formal interven-

tion if the outcome of the appeal would be likely to deter-

mine (not just affect) their rights.” In re Trans Union Corp.

Privacy Litig., 664 F.3d 1081, 1084 (7th Cir. 2011). In Trans Un-

ion, we relied in part on SEC v. Enterprise Trust Co., 559 F.3d

649, 651 (7th Cir. 2009), which held that persons claiming

rights in property in receivership could appeal the district

12 Nos. 14-3327 and 14-3344

court’s approval of the receiver’s plan without having for-

mally intervened.

Because Rule 24 intervention is not quite the exclusive

method for joining a lawsuit to appeal a district court order,

we apply Rule 69 and look to Illinois law on attachment and

execution to determine whether this procedure was proper.1

Illinois law on the procedure for attachment and execution

of a judgment gives adverse claimants to property the right

to appear and maintain a claim before their interest in the

property is extinguished. The statute on these supplemen-

tary proceedings provides:

If it appears that any property, chose in action,

credit or effect discovered, or any interest

therein, is claimed by any person, the court

shall, as in garnishment proceedings, permit or

require the claimant to appear and maintain

his or her right. The rights of the person cited

and the rights of any adverse claimant shall be

asserted and determined pursuant to the law

relating to garnishment proceedings.

735 Ill. Comp. Stat. 5/2-1402(g). This provision incorporates

the law of garnishment proceedings, which provides:

In the event any indebtedness or other property due

from or in the possession of a garnishee is claimed

by any other person, the court shall permit the

claimant to appear and maintain his or her claim. A

1We took this approach in a non-precedential decision involving

quite similar issues. United States v. Macchione, 309 Fed. App’x 53, 55 (7th

Cir. 2009) (looking to Illinois law to determine the right of adverse

claimants to appear even without formal intervention).

Nos. 14-3327 and 14-3344 13

claimant not voluntarily appearing shall be

served with notice as the court shall direct. If a

claimant fails to appear after being served with

notice in the manner directed, he or she shall

be concluded by the judgment entered in the

garnishment proceeding.

735 Ill. Comp. Stat. 5/12-710(a) (emphasis added). The statute

further provides that an adverse claimant who appears and

files a timely claim is “a party to the garnishment proceed-

ing” whose “claim shall be tried and determined with the

other issues in the garnishment action.” 735 Ill. Comp. Stat.

5/12-710(b).

The Wyatt plaintiffs argue that these statutes permit

them, without Rule 24 intervention, to oppose the release of

funds in the Gates case in district court and to appeal the

court’s adverse decision because they are adverse claimants

entitled to an opportunity to have their claim heard. They

interpret these statutes to mean that their claim on the assets

can be resolved only after they received proper notice and an

opportunity to appear and maintain their claim. Because

they never received notice, they argue, the district court, and

this court on appeal, must address their claim to the assets to

give them the opportunity to be heard granted by Illinois

law.

The Wyatt plaintiffs rely on an Illinois decision holding it

was reversible error to deny an adverse claimant the oppor-

tunity to prove his claim. See B.J. Lind & Co. v. Diacou, 278

N.E.2d 526, 529 (Ill. App. 1971) (reversing citation judgment

and directing on remand that “all parties be afforded the

opportunity to prove their respective claims”). Illinois law

undoubtedly favors giving an adverse claimant an oppor-

14 Nos. 14-3327 and 14-3344

tunity to be heard before extinguishing the claim. See 735 Ill.

Comp. Stat. 5/2-1402(g) (“If it appears” there is an adverse

claim, “the court shall, as in garnishment proceedings, per-

mit or require the claimant to appear and maintain his or her

right.”); Bloink v. Olson, 638 N.E.2d 406, 411 (Ill. App. 1994)

(holding that if third party claims entitlement to assets of

judgment debtor, “a trial must be held to ascertain the par-

ties’ rights to the disputed property”).

On the other hand, there are reasons to distinguish the

Wyatt plaintiffs’ procedural maneuver from the usual ad-

verse claim contemplated by these statutes and cases. First,

the Wyatt plaintiffs presented their adverse claim only after

the Gates plaintiffs had obtained a final judgment awarding

them the assets. Second, the Wyatt plaintiffs do not claim

that either the Gates plaintiffs or the parties holding the as-

sets (Chase and AT&T) can be faulted for failing to give no-

tice of the proceedings. The Wyatt plaintiffs acquired their

claim to the Syrian assets months after the district court or-

dered the turnover of the assets. At the time of the turnover

proceedings, neither the Gates plaintiffs nor the parties hold-

ing the assets had notice of an adverse claim by the Wyatt

plaintiffs.

Illinois law tells us, however, that the first distinguishing

fact—the Wyatt plaintiffs’ attempt to upset a final judg-

ment—does not necessarily bar their attempt to have their

claim heard. More than a century ago, an Illinois appellate

court heard the appeal of an adverse claimant who appeared

before the district court two weeks after judgment was en-

tered in favor of a judgment creditor. Paepcke-Leicht Lumber

Co., v. Becker, for Use of, 124 Ill. App. 311, 312 (1906). The ad-

verse claimant moved to vacate the judgment, but the trial

Nos. 14-3327 and 14-3344 15

court refused to upset the judgment or allow the claimant to

interplead in the case. The appellate court reversed: “It is no

answer to appellant’s claim that a judgment was entered pri-

or to his motion for leave to interplead. The court had ample

power to vacate that judgment during the term at which it

was rendered.” Id. at 317. The Paepcke-Leicht Lumber case sig-

nals that the final judgment in favor of the Gates plaintiffs

does not bar us from considering the merits of the Wyatt

plaintiffs’ claim.

Illinois law is less clear, however, on the second issue:

whether an adverse claimant is entitled to maintain her

claim even when neither the judgment creditor nor the par-

ties holding the assets had notice of the claim. Several cases,

including Paepcke-Leicht Lumber, hold that an adverse claim

should be heard whether notice of the garnishment proceed-

ings is given to the holder of the assets before or after as-

signment of funds in the account when there are sufficient

funds in the account. Id. (“The bank should have stated, in

its answer to the interrogatories, for its own protection, the

claim of which appellant had apprised it.”); Chott v. Tivoli

Amusement Co., 82 Ill. App. 244, 248-49 (1899) (“If the gar-

nishee has notice or information that a third party claims an

interest in the fund or property in controversy, he must, if he

would protect himself against such claim, disclose it by his

answer, even though he can not, of his own knowledge,

swear to the existence of the claim or its precise nature.”).

These cases indicate that the failure to give notice to a known

claimant can justify consideration of a post-judgment claim.

That does not mean that prior knowledge of the claim is nec-

essary for a court to hear it. No Illinois case that we are

aware of answers whether prior knowledge is required.

16 Nos. 14-3327 and 14-3344

As a federal court applying state law, our duty is to apply

Illinois law as we believe the Illinois Supreme Court would,

and in doing so, we accord great weight to the decisions of

appellate courts. Liberty Mutual Fire Ins. Co. v. Statewide Ins.

Co., 352 F.3d 1098, 1100 (7th Cir. 2003). The question is ad-

mittedly close, but we believe the Illinois courts would more

likely than not entertain the adverse claim on the merits,

even when the garnishee and judgment creditor had no prior

knowledge of the claim, so long as the claimant had also

been given no notice of the attachment litigation. We would

not be surprised if the Illinois courts were to decide this

question the other way, given the great interest in finality of

judgments, but our prediction is consistent with the prefer-

ence in Illinois law for giving adverse claimants a fair oppor-

tunity to be heard before extinguishing their claims. A rule

flatly barring courts from hearing later-raised adverse claims

would risk placing even fraudulent prior claims beyond re-

view. At the same time, we recognize that the approach we

adopt today is subject to abuse by fraudulent and frivolous

claims by greedy interlopers and bystanders. In such cases

(but this is not one), courts have available and should em-

ploy sanctions and other tools firmly to discourage such

abuse. For these reasons, we conclude that the Wyatt plain-

tiffs’ failure to seek to intervene in the district court does not

bar them from appealing the district court’s turnover order.

2. Mootness of Both Appeals

The Gates plaintiffs next argue that both appeals are

moot because the funds that were in the custody of the dis-

trict court have already been disbursed to them. They claim

it is no longer possible for this court or the district court to

fashion meaningful relief for the Wyatt plaintiffs because we

Nos. 14-3327 and 14-3344 17

do not have the power to order that money now in the hands

of the Gates plaintiffs be returned to the court or given to the

Wyatt plaintiffs. See A.B. v. Housing Auth. of South Bend, 683

F.3d 844 (7th Cir. 2012) (a case is moot if no form of meaning-

ful relief is possible). In the absence of a live controversy, the

Gates plaintiffs argue, the appeals should be dismissed. See

Milwaukee Police Ass’n v. Board of Fire & Police Comm’rs of

Milwaukee, 708 F.3d 921 (7th Cir. 2013).

We hold the cases are not moot because we have the eq-

uitable power to require the return of the funds if the order

releasing them was erroneous. As the Supreme Court ex-

plained almost a hundred years ago, it is a “principle, long

established and of general application, that a party against

whom an erroneous judgment or decree has been carried in-

to effect is entitled, in the event of a reversal, to be restored

by his adversary to that which he has lost thereby. This right,

so well founded in equity, has been recognized in the prac-

tice of the courts of common law from an early period.”

Arkadelphia Milling Co. v. St. Louis Southwestern Railway Co.,

249 U.S. 134, 145 (1919); see also In re Zurn, 290 F.3d 861, 862

(7th Cir. 2002) (noting that litigant should return money ob-

tained from a judgment reversed on appeal but observing

that state court was right forum for dispute); Buzz Barton &

Associates, Inc. v. Giannone, 483 N.E.2d 1271, 1275 (Ill. 1985)

(“[I]f a party has received benefits from an erroneous decree

or judgment, he must, after reversal, make restitution, and if

he has sold the property erroneously adjudged to belong to

him, he must account to the true owners for its value.”).

The Gates plaintiffs point out that these cases cited by the

Wyatt plaintiffs involved bilateral relations, where the court

ordered one party to return funds wrongfully obtained from

18 Nos. 14-3327 and 14-3344

the other party to the case. But the presence of an additional

party—here the funds originally belonged to Syria but were

disbursed to the Gates plaintiffs and now are sought by the

Wyatt plaintiffs—does not defeat our jurisdiction to correct a

disbursement if it was wrongful. We have considered this

question in interpleader cases and held that we have juris-

diction to set aside an erroneous distribution order and to

direct the defendant who received the funds to pay them to

another defendant, the rightful recipient. Smith v. Widman

Trucking & Excavating, Inc., 627 F.2d 792, 798–99 (7th Cir.

1980); see also General Railway Signal Co. v. Corcoran, No. 89 C

9360, 1992 WL 220604, at *4–5 (N.D. Ill. Sept. 4, 1992) (Rov-

ner, J.) (declining to limit Smith to Rule 60(b) motions and

concluding that a district court retains jurisdiction to vacate

an order of distribution regardless of whether the court or a

claimant holds the funds).2

Accordingly, if the Wyatt plaintiffs were to prevail on the

merits and demonstrate that the turnover orders were issued

erroneously, we would have the power to order the Gates

2 To be clear, no one contends that any party to this dispute has

committed any sort of fraud on any court. But if we accepted the Gates

plaintiffs’ argument that we have no jurisdiction even to consider the

Wyatt plaintiffs’ claim, then it would also be beyond our jurisdiction to

correct an order disbursing funds even if it had been obtained by fraud.

That troubling proposition could allow litigants to use the court’s im-

primatur to legalize fraud. During oral argument, the Gates plaintiffs

responded to the fraud hypothetical by saying that Rule 60(b)—which

lists fraud as a ground for relief from a final judgment—could be used to

correct the fraud. But that answer implicitly concedes that it would be

possible to fashion a remedy, which means that the appeals are not moot

and that we have jurisdiction to decide the merits.

Nos. 14-3327 and 14-3344 19

plaintiffs to return the funds. Because it is possible for a

court to award meaningful relief, the appeals are not moot.3

B. Jurisdiction of the District Court

The Wyatt plaintiffs raise a different jurisdictional issue,

challenging the jurisdiction of the district court. They con-

tend that the district court had no jurisdiction to issue the

November 6 order releasing the funds after the Wyatt plain-

tiffs filed their notice of appeal on October 22, 2014, which

divested the district court of jurisdiction. The Wyatt plain-

tiffs argue that the court’s November 6 order—granting the

Gates plaintiffs’ motion for release of the funds—is void be-

cause it was entered without jurisdiction. See Kusay v. United

States, 62 F.3d 192, 194 (7th Cir. 1995) (declaring that any ac-

tion by the district court after the notice of appeal was filed

but before the mandate from the court of appeals issues is a

“nullity”).4

3 To support their mootness argument, the Gates plaintiffs also rely

on Porco v. Trustees of Indiana University, 453 F.3d 390, 394–95 (7th Cir.

2006). That case is plainly distinguishable. We held Porco’s suit was

moot because the Eleventh Amendment precluded us from ordering the

defendant, a state university, to return money that had been disbursed

according to a court order. The Eleventh Amendment poses no bar to

relief in this suit because none of the Gates plaintiffs is a state.

4 The district court’s November 6 order also denied the Wyatt plain-

tiffs’ motion to stay the release of funds. The district court clearly had

jurisdiction to deny the Wyatt plaintiffs’ motion to stay the release of the

funds. Federal Rule of Appellate Procedure 8(a)(1)(A) provides that a

party to an appeal should “ordinarily move first in the district court for

… a stay of the judgment or order of a district court pending appeal.”

That rule would make no sense if a district court lacked jurisdiction to

rule on the motion for a stay of its judgment pending appeal.

20 Nos. 14-3327 and 14-3344

Our cases holding that the notice of appeal transfers ex-

clusive jurisdiction to the court of appeals have explained

that the district court is divested of control over only “those

aspects of the case involved in the appeal.” Henry v. Farmer

City State Bank, 808 F.2d 1228, 1240 (7th Cir. 1986). That rule

“does not prevent the court from handling collateral matters

such as the award of costs and … the collection of a judg-

ment.” Chicago Truck Drivers Pension Fund v. Central

Transport, Inc., 935 F.2d 114, 119–20 (7th Cir. 1991). Even after

a notice of appeal has been filed, the district court retains the

power to take further action “in aid of execution of a judg-

ment that has not been stayed or superseded.” Henry, 808

F.2d at 1240.

The district court’s November 6, 2014 order was in aid of

execution of a judgment, not a new judgment that exceeded

its jurisdiction. The district court had ordered the turnover

of the funds to the Gates plaintiffs on May 13, 2013 and Feb-

ruary 3, 2014. After that decision was affirmed on appeal by

this court and the case was returned to the district court in

August 2014, the Wyatt plaintiffs filed their opposition. The

district court considered the Wyatt plaintiffs’ claim but ulti-

mately issued a final judgment against them, dismissing

their claim, on October 22. The district court and this court

declined to stay that judgment pending appeal. The court’s

November 6 order for release of the funds was therefore a

proper execution of its judgments awarding the funds to the

Gates plaintiffs and denying the Wyatt plaintiffs’ opposition.

The district court was acting within its jurisdiction.

III. The Priority of the Competing Claims

We come at last to the merits of the dispute. The Gates

plaintiffs registered their judgment and served a citation to

Nos. 14-3327 and 14-3344 21

discover assets on December 8, 2011. Under Illinois law, that

gave the Gates plaintiffs a perfected lien on the assets as of

that date. See Gates, 755 F.3d at 578, citing 735 Ill. Comp. Stat.

5/2-1402(m). If the Gates plaintiffs’ judgment, attachment,

and execution are valid, then they plainly have priority over

the Wyatt plaintiffs, who did not register a judgment and

serve a citation to discover assets until nearly three years lat-

er.

The Wyatt plaintiffs claim that the Gates plaintiffs are not

entitled to the Syrian assets identified in the Northern Dis-

trict of Illinois because the Gates plaintiffs failed to comply

with § 1608(e) of the FSIA. That provision requires that a

foreign state be served with any default judgment entered

against it: “A copy of any such default judgment shall be sent

to the foreign state or political subdivision in the manner

prescribed for service in this section.” 28 U.S.C. § 1608(e).

For the purposes of our discussion of this argument, we as-

sume that the Wyatt plaintiffs are correct in asserting that the

Gates plaintiffs have not complied with the service require-

ments of § 1608(e).5

5 The Gates plaintiffs had the clerk of court send a copy of the de-

fault judgment to Syria via a private courier service, but the delivery was

rejected in Syria. Section 1608(a)(2) requires that documents that are

served by mail be sent “requiring a signed receipt,” which the Gates

plaintiffs admit they never obtained. The Gates plaintiffs claim that they

satisfied § 1608(e) even though they never received a signed receipt.

Most courts have interpreted § 1608 to require strict compliance with the

specific rules for service on foreign states. E.g., Magness v. Russian Federa-

tion, 247 F.3d 609, 615 (5th Cir. 2001) (“We conclude that the provisions

for service of process upon a foreign state or political subdivision of a

foreign state outlined in section 1608(a) can only be satisfied by strict

compliance.”); but see Peterson v. Islamic Republic of Iran, 627 F.3d 1117,

22 Nos. 14-3327 and 14-3344

The Wyatt plaintiffs’ argument fails to deal with the

structure and terms of the FSIA, and in particular with its

special provisions for claims for state-sponsored terrorism.

The statutory consequence of failing to satisfy the service re-

quirement in § 1608(e) is that plaintiffs with a judgment

against a foreign state cannot obtain authorization under

§ 1610(c) to proceed to attachment and execution of that

judgment. Section 1610(c) provides:

No attachment or execution referred to in sub-

sections (a) and (b) of this section shall be per-

mitted until the court has ordered such at-

tachment and execution after having deter-

mined that a reasonable period of time has

elapsed following the entry of judgment and

the giving of any notice required under section

1608(e) of this chapter.

28 U.S.C. § 1610(c). Subsections (a) and (b) list categories of

assets of foreign states, and of their agencies and instrumen-

talities, that can be attached in aid of execution of a judg-

ment obtained through a suit authorized by the FSIA. Ac-

cordingly, a plaintiff who does not serve a copy of the de-

fault judgment to satisfy § 1608(e) is not entitled to authori-

zation to execute the judgment under § 1610(c).

1129 (9th Cir. 2010) (“The Ninth Circuit has adopted a substantial com-

pliance test for the FSIA’s notice requirements and … the defendant had

actual notice.”). We do not decide what § 1608(e) requires, nor whether

the Gates plaintiffs have satisfied those requirements, because the Gates

plaintiffs were entitled to execute their judgment against the Syrian as-

sets without complying with § 1608(e).

Nos. 14-3327 and 14-3344 23

The critical point here, however, is that the Gates plain-

tiffs are not executing their judgment under § 1610(c) or un-

der § 1610(a) or (b), the provisions cross-referenced in

§ 1610(c). The Gates plaintiffs obtained § 1610(c) authoriza-

tion from the district court in the District of Columbia, which

the Wyatt plaintiffs claim was an error. That order was un-

necessary. The Gates plaintiffs are seeking to execute a

judgment for state-sponsored terrorism, so they may pro-

ceed through the execution provision specifically enacted for

terrorism judgments, § 1610(g).

As we held in Gates, Ҥ 1610(c) simply does not apply to

the attachment of assets to execute judgments under

§ 1610(g) for state-sponsored terrorism.” 755 F.3d at 575. We

reached that conclusion based on the structure and language

of the FSIA and its legislative history. We also found that

conclusion was consistent with the legislative purpose be-

hind the 2008 FSIA Amendments that added § 1610(g) to the

statute. The purpose of those amendments was “to make it

easier for terrorism victims to obtain judgments and to at-

tach assets.” Id. at 576. “Exempting attachments under

§ 1610(g), that is, attachments stemming from terrorism-

related judgments, from § 1610(c)’s solicitous notice re-

quirements is entirely consistent with the liberalizing pur-

pose of the 2008 Amendments.” Id. at 576–77.

The service of default judgments under § 1608(e) is one of

§ 1610(c)’s solicitous notice requirements, from which at-

tachments under § 1610(g) are exempt. The Gates plaintiffs,

as terrorism victims who obtained a judgment under

§ 1605A, could proceed to attachment and execution under

§ 1610(g) without complying with § 1610(c). That means they

are also exempt from § 1608(e), at least as a prerequisite for

24 Nos. 14-3327 and 14-3344

attachment and execution. A failure to comply with § 1608(e)

does not render invalid their attachment of assets and satis-

faction of their judgment for state-sponsored terrorism.

The Gates plaintiffs were therefore entitled to priority, so

we affirm the district court’s orders challenged in these ap-

peals disbursing funds to the Gates plaintiffs and dismissing

the Wyatt plaintiffs’ challenges to them. We affirm without

needing to address several alternative arguments for affirm-

ance, including whether these appeals amount to improper

collateral challenges to the District of Columbia court’s issu-

ance of a § 1610(c) order to the Gates plaintiffs, whether the

mandate rule foreclosed the Wyatt plaintiffs’ efforts after

Gates, and whether the Wyatt plaintiffs waived their chall-

enges by not pursuing their unsuccessful effort to intervene

in the Gates case in the District of Columbia years before

judgment was entered.

The orders of the district court are AFFIRMED.