O'Sullivan v. Deutsche Bank AG

Background

The plaintiffs included members of the United States armed forces and contractors who were injured in terrorist attacks in Iraq between 2003 and 2011, along with estates and family members of deceased military victims. They sued seventeen financial institutions under the civil-liability provision of the Antiterrorism Act and the Justice Against Sponsors of Terrorism Act.

The plaintiffs alleged that the defendants misused the United States banking system to provide financial support to Iran and its alleged agents and proxies. Their proposed amended complaint asserted thirteen claims involving primary liability under the Antiterrorism Act, and conspiracy and aiding-and-abetting liability under the Justice Against Sponsors of Terrorism Act. The claims included allegations concerning financial services provided to Iranian entities, foreign terrorist organizations, the Orphans Project, and other organizations.

In a March 2019 opinion, the court had dismissed the original complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a legally sufficient claim, but allowed the plaintiffs to seek permission to amend. The current opinion addresses that request.

Legal standard

Under Federal Rule of Civil Procedure 15(a), courts generally should allow a party to amend a pleading when justice requires. Amendment may be denied when it would be futile. An amendment is futile if the proposed complaint could not survive a motion to dismiss for failure to state a claim under Rule 12(b)(6).

For the plaintiffs' primary-liability claims under the Antiterrorism Act, the court identified three required components: an injury to a United States national, an act of international terrorism, and causation. The court explained that violating federal laws concerning financial transactions or material support does not automatically establish an act of international terrorism. The plaintiffs also had to plead facts plausibly showing that the defendants' conduct was a direct enough cause of their injuries.

For the Justice Against Sponsors of Terrorism Act claims, the plaintiffs had to plausibly allege either a conspiracy involving an agreement to commit an unlawful act and an injury caused by that agreement, or aiding and abetting involving a wrongful act, the defendant's general awareness of its role in the overall unlawful activity, and knowing and substantial assistance.

Court's analysis

The court held that the proposed amended complaint did not cure the defects identified in the 2019 opinion. The allegations remained materially similar to those in the original complaint. The plaintiffs' attempt to connect the attacks to foreign terrorist organizations, rather than only to Iraq-based militias, did not make the causal chain sufficiently direct.

The court found that the proposed complaint did not plausibly allege that the defendants participated in the attacks, provided money or goods directly to a foreign terrorist organization or direct perpetrator, or processed funds that were actually transferred to the groups that carried out the attacks. It also did not plausibly allege that Iran or its alleged agents and proxies could not have assisted the terrorist groups without the defendants' services. The court further stated that the banking services, as alleged, did not themselves plausibly constitute acts dangerous to human life intended to intimidate or coerce civilians or affect a government.

The court rejected the proposed aiding-and-abetting claims because allegations that the defendants knowingly violated laws intended to prevent terrorist financing did not plausibly show that they were generally aware they were taking a role in a foreign terrorist organization's act of international terrorism. It rejected the proposed conspiracy claims because the complaint did not provide facts showing that the defendants knowingly played a role in the terrorist activities or entered agreements to commit the attacks.

The court also declined to consider the plaintiffs' expert and other supporting declarations as part of the complaint. It concluded that those materials were not legal or written instruments and were not documents integral to the claims.

Disposition

The court denied the plaintiffs' motion for leave to file their proposed amended complaint. It denied leave to amend the primary-liability claims as futile and denied leave to assert the aiding-and-abetting and conspiracy claims. The court dismissed the original complaint with prejudice in its entirety as against Deutsche Bank AG, the HSBC defendants, Commerzbank AG and its New York branch, Barclays Bank Plc, BNP Paribas S.A., Standard Chartered Bank, the two Royal Bank of Scotland defendants, Crédit Agricole S.A., Crédit Agricole Corporate & Investment Bank, and Credit Suisse AG. The opinion states that Bank Saderat had not appeared or defended and that a certificate of default had been entered against it; it does not state in this conclusion that the complaint was dismissed against Bank Saderat.