Licci v. American Express Bank
During the summer of 2006 Hezbollah fired thousands of rockets into Israel from Lebanon.
Yaakov Licci was injured while running to a bomb shelter and required immediate removal of his spleen. While Licci was hospitalized, another rocket landed directly on the hospital and he received severe shrapnel wounds to his entire body.
Hezbollah maintained accounts at the Lebanese Canadian Bank (LCB) which maintains a correspondent banking relationship with American Express Bank (AMEX) in NY. Between the years 2004 and 2006, LCB used AMEX to wire money to Hezbollah accounts.
On August 15, 2008, American, Canadian and Israeli citizens who were injured by Hezbollah rockets filed a suit against AMEX and the LCB at the Southern District Court of New York. The claims were filed under the Antiterrorism Act, Alien Tort Claims Act and under Israeli law for negligence and breaches of statutory duty, which facilitated Hezbollah’s financial account network and provided Hezbollah with the economic strength to conduct a campaign of sustained rocket fire on Israeli citizens.
The District Court granted the Defendants’ motion to dismiss the claim. The court held that there was no jurisdiction over LCB, because they were merely doing business through an associate bank, which was insufficient grounds for establishing jurisdiction over a foreign entity.
As for AMEX, the court held that AMEX did not have the requisite knowledge of Hezbollah activities and its intended use of the funds. Furthermore, the Court found a lack of proximate cause between the wire transfers and Hezbollah’s activities.
Plaintiffs appealed to the Second Circuit Court of Appeals in August 2010. The plaintiffs argued that the district court incorrectly applied the broad jurisdictional capacities of the ATA, as the act allows jurisdiction even on the basis of a single act, such as one wire transfer.
In February 2011, the Second Circuit ruled that NY law would govern, as the conduct at issue, banking services, took place in NY. Additionally, the Court certified two questions to the New York Court of Appeals. The Court inquired whether wire transfers constitute a transaction of business in NY, and if so, whether the plaintiffs claim arose from these transactions, under NY’s long arm statute. In November 2012, the NY Court of Appeals responded affirmatively to both questions.
In October 2013, the Second Circuit ruled that the allegations were sufficient to support personal jurisdiction under NY’s long arm statute; that LCB bank purposely availed itself of the privilege of doing business in NY; and that the exercise of personal jurisdiction was reasonable. The Court remanded the case to the district court for further proceedings.