Case of the Day: Leibovitch v. Iran
Posted on April 5, 2017
The case of the day is Leibovitch v. Islamic Republic of Iran (7th Cir. 2017). The plaintiffs were the victims of a terrorist attack in Jerusalem by members of Palestine Islamic Jihad, a terrorist group supported by the government of Iran. The plaintiffs had a default judgment against Iran for $67 million. Seeking to collect, the plaintiffs served subpoenas on the Chicago branches of the Bank of Tokyo-Mitsubishi and BNP Paribas. Neither branch held Iranian assets, but the plaintiffs asserted that they should have to produce information about Iranian assets known to the branches’ foreign parents in Japan and France, respectively.
The banks agreed to provide information about assets held in the US (there were none) but not assets held at the banks’ branches anywhere else in the world. The plaintiffs insisted, so the banks moved to quash on personal jurisdiction grounds.
Judge Posner was very unhappy with the plaintiffs:
We’re puzzled that none of the plaintiffs who brought the suit against Iran that resulted in the default judgment are residents of Illinois. Why they are suing here rather than in the districts in which they live or work is unexplained. What is worse than merely unexplained is that they’ve presented no evidence to suggest that the two Chicago branch banks are either holding Iranian government assets or have any knowledge of where those assets might be held. In short, what are they doing here?
Okay. Doctrinally, though, I don’t really agree with the court’s approach. Judge Posner looked at the issue through the same lens of personal jurisdiction that it would be proper to apply if the banks were defendants instead of recipients of subpoenas: are they subject to general jurisdiction under Daimler? Are they subject to specific jurisdiction? I don’t think this is the right way to think about it. In the context of Rule 45, it’s still necessary to have personal jurisdiction, but the concept of personal jurisdiction is almost entirely territorial. Under FRCP 45(b)(2), service of a subpoena issued by the court where the action is pending can be made anywhere in the United States, though a court is required to quash it if it would require the witness to travel more than 100 miles. There is no “long-arm statute” for subpoenas, and so the whole notion of minimum contacts, etc., seems inapposite to me. If the subpoena is served within the United States, then it seems to me there is no jurisdictional hurdle to enforcement, but rather just a hurdle imposed by the Rule, which seeks to limit the inconvenience to witnesses that travel would impose.
My way of looking at this makes better sense, I think, when you consider the policies behind the constitutionalization of personal jurisdiction in the first place. Personal jurisdiction is a constitutional requirement because no one can be deprived of life, liberty, or property without due process of law. But the banks in this case aren’t being deprived of life, liberty, or property. They’re just being asked to provide evidence, with the benefit of all the protections in Rule 45 against undue burden and expense, etc. In the case of a defendant in a civil action, the deprivation of property happens, if at all, at the end of the case when the court gives judgment. In the case of the recipient of a subpoena, participation in the judicial process is the deprivation, to the extent there is a deprivation; and the law doesn’t regard having to participate in legal proceedings as a deprivation of constitutional magnitude (there are exceptional cases such as foreign sovereign immunity where courts treat having to participate in the litigation as a harm in itself).
I think if we leave personal jurisdiction aside, we can get at the real issue, which is whether a US branch of a foreign bank should be required to produce records from around the world. If that is the issue, then it seems to me that FRCP 45 already contains part of the answer insofar as it protects witnesses from undue burden and expense. If the issue is not burden or expense but rather comity and a concern not to force banks to violate foreign data privacy laws or blocking statutes, then that’s an issue worthy of debate. But the Seventh Circuit doesn’t go through that exercise here.