LINDE v. ARAB BANK, PLC
In July 2004, Osen LLC sued Arab Bank, Plc on behalf of American terror victims in the U.S. District Court for the Eastern District of New York. The lawsuit, captioned Linde v. Arab Bank, Plc was the first civil lawsuit brought against Arab Bank under the Anti-Terrorism Act (“ATA”). The Plaintiffs sought to hold Arab Bank liable for deaths and severe injuries resulting from acts of international terrorism that Palestinian terrorist groups perpetrated between 2000 and 2004, during the Second Intifada. After 10 years of litigation that included multiple appeals, American victims of terrorism were finally able to present their case to a Brooklyn jury in August and September 2014. The trial centered around 24 terrorist attacks that the Plaintiffs alleged were perpetrated by Hamas, a Foreign Terrorist Organization that the United States first designated a terrorist entity in 1995. On September 22, 2014, an 11-person jury unanimously found Arab Bank liable for knowingly providing financial services to Hamas. This finding represented the first, and still only, time a jury found a financial institution civilly liable for aiding terrorism.
The Liability Trial (August-September 2014)
During the course of the trial, which centered around 24 Hamas terrorist attacks between March 2001 and September 2004, the Plaintiffs proved that Arab Bank knowingly provided material support to Hamas by illegally maintaining accounts for: Hamas (via an account held in the name of senior Hamas leader and spokesman Osama Hamdan that accepted multiple checks explicitly made out to beneficiary "Hamas"); Hamas’s founder and supreme leader, Sheikh Ahmed Yassin (Yassin was first designated a Specially Designated Terrorist in 1995); and dozens of other Hamas leaders and senior operatives, including Salah Shehadeh - founder and former head of Hamas’s terror apparatus, the Izz al-Din al-Qassam Brigades in Gaza, and Ismail Haniyeh, former Prime Minister of the Palestinian Authority and current supreme Hamas leader. The Plaintiffs also proved that Arab Bank knowingly provided material support to terrorist groups such as Hamas and Hezbollah that facilitated millions of dollars in direct transfers to the families of suicide bombers and other terrorist operatives through the Saudi Committee for the Support of the Intifada al Quds and Hezbollah’s Martyrs Foundation. Lastly, the Plaintiffs proved that Arab Bank knowingly provided material support to Hamas by maintaining accounts for eleven Hamas-controlled organizations in the Palestinian Territories.
One of Arab Bank's chief contentions, voiced by defense expert Beverley Milton-Edwards, was that the identities of Hamas leaders were not well known between 2000-2004. The jury, however, was shown a video of the funeral of the infamous Hamas bomb-maker, Muhanad al-Taher, in the town square of Nablus. Hamed Beitawi, vice-Chairman of the Nablus Zakat Committee and Chairman of the Islamic Solidarity Al-Tadhamun Charitable Society - Nablus (two of the eleven relevant Hamas-controlled organizations, both of which maintained accounts at Arab Bank) spoke at this very public event. Dr. Milton-Edwards was also impeached by video showing Salah Shehadeh giving a speech to a massive audience, thus undercutting the Bank’s claim that Hamas leaders “lived in the shadows.”
After the jury rendered its unanimous verdict, Arab Bank filed 3 motions, arguing: (1) notwithstanding the jury’s verdict, Arab Bank was entitled to victory on the merits and dismissal of the case; (2) if the Court would not grant that relief, Arab Bank was entitled to a new trial because of purported mistakes the Court made in managing the trial; and (3) in any event, the Bank was entitled to immediate review of the verdict by the U.S. Court of Appeals for the Second Circuit.
The Court rejected the Bank’s contention that the evidence was not sufficient to support the jury’s verdict but determined that the Plaintiffs had not established that Hamas was responsible for 2 of the 24 attacks. The Court denied the Bank’s motions for a new trial and for Second Circuit review of the verdict. In its decision, the Court noted that the Bank’s liability was established “on volumes of damning circumstantial evidence that defendant knew its customers were terrorists.”
The Court further noted the testimony of the Bank’s own former head compliance officer in London who was presented with the Saudi Committee wire transfer payable to “the family of martyr Ibrahim Karim Beni Awda” and responded: “We would never in a million years have dealt with a payment order such as this.”
The Court’s decision also took note of the testimony of Arab Bank’s primary expert witness, Dr. Milton-Edwards, who testified that the organizations in the Palestinian Territories at issue in the case were neither controlled by Hamas nor perceived as Hamas affiliates during the relevant period based in part of her review of “paraphernalia” she observed during her visits to these organizations. The Court observed that her testimony “backfired in spectacular fashion” when “it came out on cross-examination that she could not read Arabic.”
Furthermore, the Court noted Dr. Milton-Edwards’ impeachment by her own book: She had testified that the Islamic Society of Gaza was neither affiliated with Hamas nor perceived as such by the Palestinian public. Her book told a different story, however:
The work of the Islamic Society and the rest of Hamas’s network in the decades up to, during and after the second intifada, when families needed it most, represented not so much a donation as an investment by Hamas, one that reached a lucrative political dividend in the 2006 election.
Ultimately, the Court concluded, “the effect of cross-examination on Dr. Milton-Edwards’ testimony, and its potential spillover effect on the credibility of defendant’s entire case, is … hard to overstate.”
Arab Bank’s Appeal
Following the Court’s denial of the Bank’s motions for a new trial the parties prepared for the first damages trial, which the parties agreed to postpone once they reached a framework for settlement of all of the Plaintiffs’ Anti-Terrorism Act-related claims.
As part of the settlement, the Bank reserved the right to take a one-time appeal of the liability verdict, the outcome of which would determine the settlement’s precise financial contours. The Bank elected to take that appeal, and the Second Circuit heard extensive oral argument on May 16, 2017.
On February 9, 2018, the Second Circuit rejected the Bank’s argument that the jury’s verdict could not be supported by the evidence but ruled that the district court had committed a reversible error by failing to provide a jury instruction on the definitional requirements of an “act of international terrorism” for the Plaintiffs’ Section 2333(a) claim.
The Second Circuit noted that:
We agree that plaintiffs are entitled to the benefits of JASTA’s [Justice Against Sponsors of Terrorism Act] expansion of ATA liability to aiders and abettors on this appeal, [and the Second Circuit acknowledged that] Hamas operatives carried out the attacks underlying plaintiffs’ ATA claims, and those attacks satisfy all the definitional requirements of international terrorism stated in § 2331(1). From the charge given and the verdict returned, we can also assume that the jury found Arab Bank to have provided material support in the form of financial services to what it knew was a designated terrorist organization.
Under the terms of the settlement, once the Second Circuit issued its decision, the case was fully resolved and no new trial for the Linde Plaintiffs was rescheduled. However, because the exact contours of the settlement were confidential, and the judgment appealed was a stipulated amount of $100 million, many media reports have incorrectly reported that the Second Circuit’s ruling either resulted in a payment of $100 million or that it reduced the amount of the settlement from that figure. However, the stipulated sum used for certifying the judgment for appeal bears no relation to the compensation the Plaintiffs received.
As Osen LLC noted at the time: “We would have liked a sweeping victory, but we’re still very satisfied with the result. The plaintiffs will receive meaningful and very substantial compensation for their injuries, and today’s decision doesn’t diminish the fact a jury found Arab Bank liable for knowingly supporting Hamas. For other victims of terrorism, this ruling makes clear that the Anti-Terrorism Act can still provide the justice and accountability they deserve.”
MILLER v. ARAB BANK, PLC
In April 2018, Osen LLC sued Arab Bank, Plc on behalf of additional American terror victims in the U.S. District Court for the Eastern District of New York. The case was brought under the ATA as amended and broadened by JASTA. As detailed in their Amended Complaint, the Plaintiffs sought to hold Arab Bank liable for injuries resulting from acts of international terrorism that Palestinian terrorist groups perpetrated in 2001 and 2002, during the Second Intifada. In March 2019, the District Court largely denied Arab Bank’s motion to dismiss the Amended Complaint. In concluding that the Plaintiffs had plausibly alleged that Arab Bank itself committed acts of international terrorism, the Court noted:
Arab Bank’s administration of the Insurance Scheme was dangerous to human life under 18 U.S.C. § 2331(1)(A) because, by rewarding acts of terrorism, it incentivized prospective “martyrs” to commit acts of violence and enhanced Hamas’s reputation among potential recruits. Arab Bank further enhanced terrorists’ ability to conduct acts of violence by routing payments and maintaining accounts for terrorists and terrorist organizations…. The most plausible inference from the complaint is that Arab Bank knew it was doing business with terrorists who were going to use violence to attack civilians. (Decision at 13-14.)
In concluding that the Plaintiffs had plausibly alleged under JASTA that Arab Bank had aided and abetted acts of international terrorism, the Court noted:
Twelve of the attacks at issue were caused by FTOs and their agents. For years, Arab Bank provided banking services – including, but not limited to, administering the Insurance Scheme – that assisted their terrorist campaign under circumstances indicating that Arab Bank had a culpable state of mind, as explained above. Arab Bank also maintained accounts for Hamas, its affiliates, and other terrorist organizations, which further demonstrates its close relationship with the perpetrators. Even if Arab Bank did not know about the specific attacks at issue when it provided financial support for terrorist organizations, it was generally aware of its role in violent activities in light of the causes of death identified on the lists Arab Bank received as part of the Insurance Scheme and in light of the information Arab Bank received indicating that it cleared fund transfers for entities that the United States government later designated as terrorist organizations. (Decision at 17-18.)
Following the Court’s ruling, the parties have been engaged in initial discovery.