Case 1:08-cv-01273-RCL Document 6 Filed 09/30/09 Page 1 of 191 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 - 1 - Case 1:08-cv-01273-RCL Document 6 Filed 09/30/09 Page 2 of 191 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 - 2 - Case 1:08-cv-01273-RCL Document 6 Filed 09/30/09 Page 3 of 191 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 - 3 - Case 1:08-cv-01273-RCL Document 6 Filed 09/30/09 Page 4 of 191 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. - 4 - Case 1:08-cv-01273-RCL Document 6 Filed 09/30/09 Page 5 of 191 Appropriations Act