District Court Refuses to Enforce Third-Party Subpoenas Against Branches of Non-US Banks that would Require Them to Search for Records Worldwide

The World in U.S. Courts: Summer and Fall 2016 - Alien Tort Statute (ATS)/Torture Victims Protection Act (TVPA)/Anti-Terrorism Act (ATA) | June.29.2016

Leibovitch v. Islamic Republic of Iran, U.S. District Court for the Northern District of Illinois, May 19, 2016

This action, brought under the ATS, alleged that Iran was responsible for a terrorist attack in Israel that injured plaintiff family members.  The defendant did not appear, and the Court entered a default judgment in the amount of almost $67 million.  Subpoenas were issued to two non-US banks—the Bank of Tokyo-Mitsubishi UFJ, Ltd. and BNP Paribas Bank—to obtain discovery of and to freeze Iranian assets held by the banks anyplace in the world.  The banks responded by limiting their search to the knowledge of employees located in Chicago, the forum where the litigation was brought.  They argued principally that the Court lacked personal jurisdiction over them, that principles of international comity militate against permitting the expansive, global discovery requested, and that disclosing these records would potentially subject them to civil penalties in countries outside the US for violating local privacy laws. 

As a preliminary matter, the Court determined that it could not assert general personal jurisdiction over the banks based on the presence in the forum of branches that were not themselves related to any company having its headquarters or principal place of business in Illinois.  In so ruling, the Court determined that the Supreme Court’s Daimler rule requiring that a party be “at home” in a forum for general jurisdiction to attach applied equally to parties and non-parties.  It also rejected the argument that the bank branches’ registrations with the State of Illinois, which required the appointment of an agent for service of process, amounted to consent to be sued.

The Court likewise found the banks were not subject to specific personal jurisdiction, which requires that a defendant have “minimal contacts” with the forum and that the assertion of jurisdiction does not otherwise “offend traditional notions of fair play and substantial justice.”  “Minimal contacts” also carries the requirement that a plaintiff’s claim arise out of the defendant’s contacts with the forum, and the Court discussed whether, in the context of third party actions, it was required to focus on the underlying claims in the case or just the discovery sought.  The Court found no connection existed under either rule.  It also rejected the argument that it should look to the banks’ contacts with the US as a whole, because the ATS allowed for nationwide service of process, rather than just their contacts with Illinois.

Finally, the Court also concluded that the assertion of jurisdiction was separately prohibited because it would not satisfy the reasonableness requirement of the Due Process Clause, and that requiring the banks to conduct a worldwide records search would violate principles of international comity.  It credited the banks’ claims as to the burdensomeness of discovery, especially in connection with branches that bore no relationship to the allegations of the case, and accepted the banks’ argument that privacy laws in other countries would be violated by compliance with the discovery order.  In closing, the Court noted that alternative remedies might be available elsewhere.

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