(Reuters) – A $ 300 “red herring” failed to sway a federal judge in Manhattan last week.
U.S. District Judge Andrew Carter has refused to dismiss a lawsuit in which the family of an American teenager claim that two Russian banks allowed a Russian supremacist group to shoot down a Malaysia Airlines plane over the United States. Ukraine in 2014.
The anti-terrorism law, as you know, establishes a cause of action for American citizens against banks that provide material support to terrorist groups. But the ATA’s plaintiffs have yet to prove that the US courts have jurisdiction to hear their claims.
It was a key issue in the lawsuit brought by the parents and sister of Quinn Schansman, who was 18 and was on a family vacation when he died aboard the Malaysian jet. In an amended complaint filed last October, Schansman’s family alleged that two Russian banks – Sberbank of Russia PJSC and VTB Bank PJSC – funneled millions of dollars to the Donetsk People’s Republic, the Russian separatist group allegedly responsible for the downing of the Malaysain Air plane.
The amended complaint claimed that New York had jurisdiction over the family’s case because Sberbank and VTB routinely and deliberately routed transfers to the separatist group through their New York-based correspondent accounts at US banks.
Family attorneys at Jenner & Block were able to document two of these transactions in the amended complaint by obtaining early discovery of a court-ordered subpoena served on two of those US banks, Bank of America and Bank of New York Mellon. According to Jenner, partial records from only these two banks showed that Sberbank was using US banks to transfer donations to the Russian supremacist group.
It is unusual for ATA complainants to assert specific transaction details in their complaints, as such allegations can only be based on internal bank records – and complainants typically do not have quick access to these documents. (The trial judge in the Schansman case allowed subpoenas to BofA and BNY Mellon when U.S. banks said they would not voluntarily keep evidence without a subpoena.)
The Schansmans’ amended complaint claimed that the two documented money transfers were just the tip of an iceberg of transactions in which millions of dollars were transferred to the suspected Russian terrorist group via US accounts owned by Sberbank and VTB . The group’s fundraisers, according to Jenner & Block, confirmed the flow of money through detailed financial records they posted online. This public evidence, according to the complaint, amply justified New York’s jurisdiction over Russian banks.
But bank lawyers have attempted to use the very specificity of the Schansmans’ claims to defeat the family’s jurisdiction claims. In the dismissal motions by the Sberbank attorneys at Debevoise & Plimpton and the VTB attorney at Latham & Watkins, the banks argued that the early discovery of the family in fact showed the weakness of the Schansmans’ jurisdictional case. .
Those two transactions documented through Sberbank’s account at Bank of America, they said, totaled $ 300. According to Russian banks, two transfers totaling $ 300 was not convincing evidence that the banks were deliberately and repeatedly using the US banking system, as required to establish New York’s jurisdiction.
“The identification by the plaintiffs of only two mechanical transfers totaling $ 300 via Sberbank correspondent accounts,” Debevoise wrote in Sberbank’s dismissal motion, “is too insignificant to justify personal jurisdiction over Sberbank to New York”.
Jenner & Block called the size of the two documented transfers of red herring in its brief opposing the banks’ layoff motions. These two transactions, Jenner argued, were simply what plaintiffs’ attorneys were able to document from incomplete records produced by only two of the U.S. banks where Sberbank and VTB held accounts. Other U.S. banks have processed more and larger transfers, according to the record.
Further, Jenner argued, a key US 2nd Court of Appeals precedent does not require ATA plaintiffs to identify specific transactions to establish jurisdiction, let alone identify particular transfers. important via US banks. The 2013 appeal court decision in Licci v. Canadian Lebanese Bank only requires the plaintiffs to allege that the defendants have systematically relied on US banks, Jenner argued. The Schansman’s claims, Jenner said, far exceeded Licci’s demands.
In last week’s decision, Carter agreed. ATA plaintiffs, he said, do not have to allege details of the individual transfers to establish the personal jurisdiction of the New York courts. The plaintiffs simply need to show that the defendants repeatedly and deliberately used the New York banking system to transfer funds that allegedly supported terrorist operations. The Schansmans, Carter said, passed that test by alleging that the Russian supremacist group asked donors to send money through US correspondent accounts of Russian banks.
I emailed Debevoise’s attorneys from Sberbank and Latham’s attorney from VTB for comment, but got no response.
The Schansmans ‘lead attorney, David Pressman of Jenner, said the banks’ emphasis on the small size of the two document transactions was “a distraction, and the court refused to be distracted.”
His clients’ complaint, he said, was particularly detailed for an ATA lawsuit, thanks both to partial files obtained from BofA and BNY Mellon and to the Russian separatist group’s online posts about its fundraising – including included instructions for using US accounts belonging to Sberbank and VTB – and spending on weapons. Had those allegations been deemed insufficient to establish New York’s jurisdiction, Pressman said, no plaintiff could resist a motion to dismiss without the bank defendants’ own internal records.
“This is not the intention of Congress when it enacted the anti-terrorism law,” Pressman, who was previously the United States ambassador to the United Nations Security Council, said in a follow-up email. âThis is not what logic requires. And that would forever immunize the big banks from any liability for their involvement in heinous acts such as those that killed Quinn. “
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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the principles of trust, is committed to respecting integrity, independence and freedom from bias.
Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A graduate of Dartmouth University, she worked as a reporter in New York covering the legal industry and law for more than three decades. Prior to joining Reuters, she was a writer and editor for The American Lawyer. Frankel is the author of Double Eagle: The Epic Tale of the World’s Most Valuable Coin. Contact her at [email protected]