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Media Alerts - Licci, et al. v. Lebanese Canadian Bank, SAL - Second Circuit
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October 20, 2013
  Licci, et al. v. Lebanese Canadian Bank, SAL - Second Circuit
Headline: Second Circuit Holds Exercise of Personal Jurisdiction Over Lebanese Canadian Bank in Terror Case, Based on Bank's "Recurring" Use of New York Bank Account to Execute Wire Transactions, Comports with Constitutional Due Process.

Area of Law: Constitutional Law/Civil Procedure

Issues Presented: Whether exercising personal jurisdiction over a foreign bank in federal court in New York, where the bank's only contact with New York was its recurring use of a New York bank account to execute wire transactions, comports with due process principles under the United States Constitution?

Brief Summary: The underlying case involves Lebanese Canadian Bank's ("LCB") repeated use of a New York based bank account to wire transfer millions of dollars. Plaintiffs, American, Canadian, and Israeli citizens, sued LCB for violations of United States anti-terrorism laws and related claims under Israeli law, in the United States District Court for the Southern District of New York alleging that the money was wired by LCB on behalf of the terrorist organization Hizballah to be used to carry out rocket attacks in July and August 2006 in Israel. After the District Court granted LCB's motion to dismiss for lack of personal jurisdiction, and plaintiff's appealed the dismissal, the Second Circuit certified two questions to the New York Court of Appeals, seeking clarification as to whether LCB's conduct constituted "transacting business" in New York and, if so, whether the harm to plaintiffs could be found to have arisen from the LCB's New York business transactions, such that personal jurisdiction could be proper under the New York Long Arm Statute, N.Y. C.P.L.R. §302(a)(1).

Upon the New York Court of Appeals answering the certified questions affirmatively, the Second Circuit went on to analyze here whether exercising personal jurisdiction over LCB was consistent with the due process principles under the United States Constitution. The Second Circuit then held that, in light of allegations that LCB executed dozens of dollar-denominated wire transfers and that it selected and repeatedly used New York's banking system, exercising personal jurisdiction over LCB satisfied due process.

To read the full opinion, please visit: http://www.ca2.uscourts.gov/de...64e230d88dc/2/hilite/

Extended Summary: Plaintiffs, American, Canadian, and Israeli citizens, sued Lebanese Canadian Bank's ("LCB"), a foreign bank, in the United States District Court for the Southern District of New York, alleging that LCB repeatedly used a New York-based bank account to wire millions of dollars on behalf of the terrorist organization Hizballah, to be used to carry out rocket attacks in July and August 2006 in Israel in violation of the Anti-Terrorism Act, Alien Tort Statute, and Israeli law. LCB moved to dismiss the action for lack of personal jurisdiction, the District Court granted the motion funding no basis for personal jurisdiction under the New York State Long-Arm Statute, N.Y. C.P.L.R. §302(a)(1), and plaintiffs appealed.

In March 2012, the Second Circuit certified two questions to the New York Court of Appeals. First, the court asked whether a foreign banks use of a New York bank account to execute dozens of wire transfers is sufficiently purposeful conduct to constitute transacting business under the New York State Long-Arm Statute. Second, the court asked whether the allegations in the complaint established the requisite "nexus" between the foreign bank's New York activity and the Plaintiff's claims to support the exercise of personal jurisdiction under the Long Arm Statute. The Court of Appeals answered yes to both.

With the New York statute satisfied, the Second Circuit went on to analyze whether exercising personal jurisdiction over LCB comports with constitutional due process standards requiring "minimum contacts" with the New York forum. The Second Circuit held that it did, reasoning that LCB's selection and repeated use of New York's banking system as an "instrument for accomplishing the alleged wrongs" constituted "purposeful availment" of the privilege of doing business in New York. The Second Circuit noted that, because of the prevalence of United States currency, LCB could have processed the dollar-denominated wire transfers anywhere in the world, but specifically chose New York.

Although the court warns that "mere maintenance" of an account would not be sufficient to support the constitutional exercise of personal jurisdiction over the account holder, the Second Circuit stated that, here, LCB utilized the New York bank account for dozens of transactions, wiring several million dollars in total and, thus, the contacts were not "random, isolated, or fortuitous." The Court also distinguished the present case from the In re Terrorist Attacks on Sept. 11th, 2001 case because, here, the jurisdictional basis of the conduct - the wire-transfers - occurred within the forum, rather than outside of New York as in that case. Finally, the Court reasoned that both the state and federal government have an interest in monitoring banks and banking activity to ensure that its system is not used as an instrument to support terrorism and, therefore, taken together with the showing of minimum contacts, the exercise of personal jurisdiction over LCB would not offend principles of fair play and substantial justice.

To read the full opinion, please visit: http://www.ca2.uscourts.gov/de...64e230d88dc/2/hilite/

Panel: Chief Judge Katzmann and Circuit Judges Kearse, & Sack

Argument: 02/25/2011

Date of Issued Opinion: 10/ 18 /2013

Docket Number: 10-1306-cv

Decided: Affirmed

Case Alert Author: Andrew S. Paliotta

Counsel: Robert J. Tolchin, The Berkman Law Office, LLC, for Plaintiffs-Appellants and Jonathan D. Siegfried, DLA Piper LLP, for Defendant-Appellee.

Author of Opinion: Judge Sack

Case Alert Circuit Supervisor: Elyse Diamond Moskowitz

    Posted By: Elyse Diamond @ 10/20/2013 05:35 PM     2nd Circuit  

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