Mueller v. Deutsche Bank Aktiengesellschaft

Background

The plaintiffs are family members and estates of three people abducted, tortured, and killed by the Islamic State of Iraq and Syria (ISIS): Kayla Mueller, James Foley, and Steven Sotloff. They sued Deutsche Bank Aktiengesellschaft (DBA) and its American affiliate, Deutsche Bank Trust Company Americas (DBTCA), under the Trafficking Victims Protection Reauthorization Act (TVPRA), 18 U.S.C. § 1595(a).

The complaint alleged that the defendants knowingly benefited from participating in a venture involving ISIS human trafficking by providing financial services to customers affiliated with ISIS. The alleged services included processing transactions connected to value-added-tax fraud schemes and providing dollar-clearing and other correspondent-banking services to banks in areas of Iraq controlled by ISIS. The plaintiffs alleged that these services helped ISIS obtain and use money to support hostage-taking operations.

DBA moved to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Both defendants moved to dismiss for failure to state a claim under Rule 12(b)(6).

Personal Jurisdiction

The court denied DBA’s personal-jurisdiction motion. At this stage, the plaintiffs had to make a preliminary showing that jurisdiction existed, and the court accepted the complaint’s factual allegations as true.

The court relied on allegations that DBA used DBTCA and its New York branch to provide dollar-clearing services for customers. It concluded that the alleged New York banking activity had a sufficient relationship to the plaintiffs’ TVPRA claim. The court also rejected DBA’s argument that the plaintiffs relied only on the corporate relationship between DBA and DBTCA, finding that the complaint alleged DBA itself worked through New York correspondent accounts for its clients.

Failure to State a Claim

The court granted the defendants’ Rule 12(b)(6) motion. It explained that the TVPRA permits a victim to sue a person who knowingly benefits financially from participating in a venture that the person knew or should have known violated the statute.

The court held that the complaint did not plausibly allege participation. Regarding both the tax-fraud allegations and the seized-bank allegations, the complaint described routine financial services rather than a shared enterprise involving the defendants and their customers. The complaint also did not allege that the defendants provided services tailored to the customers in the way that might show active participation in a common venture. Allegations that the defendants charged higher fees to suspicious or high-risk customers did not change that conclusion.

The court also held that the complaint did not plausibly allege the required knowledge. Allegations that customers displayed signs of tax fraud, operated in locations associated with past al-Qaeda fundraising, or were involved in suspicious transactions showed possible illegal activity, but did not reasonably establish knowledge that the customers were participating in human trafficking. The court likewise found that the defendants’ awareness of warnings about ISIS, or their filing of suspicious-activity reports, was not enough to infer knowledge of trafficking.

Because the complaint failed to plausibly allege both participation in and knowledge of a venture engaged in conduct prohibited by the TVPRA, the court dismissed the claim. The court did not decide whether TVPRA beneficiary liability requires knowledge of trafficking involving the specific plaintiffs, because that issue was unnecessary to its decision.

Disposition

Judge Denise Cote denied the defendants’ motion to dismiss for lack of personal jurisdiction and granted their motion to dismiss for failure to state a claim. The Clerk of Court was directed to enter judgment for the defendants. The opinion does not specify whether the dismissal was with or without prejudice.