Opinion · Court of Appeals for the Seventh Circuit
United States v. All Funds on Deposit With R.J. O'Brien & Associates
United States v. All Funds on Deposit With R.J. O'Brien & Assocs., 783 F.3d 607 (7th Cir. 2015)
- Type
- Opinion
- Court
- Court of Appeals for the Seventh Circuit
- Jurisdiction
- Federal
- Date
- 2015-04-02
- Topic
- litigation
finding that the TRIA conferred statutory standing to contest forfeiture action where it was “impossible” both to comply with forfeiture law and execute under TRIA | noting that funds at issue there were subject to “OFAC . . . license to the United States ‘to pursue criminal forfeiture of the . . . assets’” | noting that “purely psychological harm” does not suffice to establish Ar- ticle III standing | noting that “purely psychological harm” does not suffice to establish Article III standing | noting that "purely psychological harm" does not suffice to establish Article III standing | noting that “purely psychological harm” does not suffice to establish Article III standing | finding that “there are no . . . limit[s]” to the scope of the “notwithstanding” clause in the TRIA and holding that the broadness of the clause “supersedes the innocent ownership requirement of civil forfeiture” | recognizing the “potent power of a ‘notwithstanding’ clause” to “supercede conflicting provisions” | approving forfeiture to the government of funds blocked by OFAC for violation of the IEEPA | finding, as a “threshold issue[ ],” that plaintiffs had statutory standing to sue under the Terrorism Risk Insurance Act before finding they failed to prove a claim under the Act | approving forfeiture to the government of funds blocked by OFAC for violation of the IEEPA | noting that “purely psychological harm” does not establish standing | applying, without explanation, the Rule 15(a)(1)(2) standard to a Rule G notice | “The [OFAC] license, coupled with the restrained status of the funds, rendered them unblocked under TRIA.” | “[T]he Federal Rules of Civil Procedure are always in play, even in the midst of civil forfeiture actions.” | “Parties to civil forfeiture proceedings are the servants of two procedural masters: the Supplemental Rules devised for... in rem proceedings, and the generally applicable Federal Rules of Civil Procedure.” | “Parties to civil forfeiture proceedings are the servants of two procedural masters: the Supplemental Rules devised for... in rem proceedings, and the generally applicable Federal Rules of Civil Procedure.” | “Parties to civil forfeiture proceedings are the servants of two procedural masters: the Supplemental Rules devised for . . . in rem proceedings, and the generally applicable Federal Rules of Civil Procedure.” | “When a statute is unambiguous, our inquiry starts and stops at the text.” | “[P]er TRIA’s text, victims of terror may only execute on ‘blocked’ funds.”
Citator
- Cited by
- 37 opinions
In the
United States Court of Appeals
For the Seventh Circuit
Nos. 13‐3732 & 13‐3738
UNITED STATES OF AMERICA,
Plaintiff‐Appellant,
v.
ALL FUNDS ON DEPOSIT WITH R.J. O’BRIEN &
ASSOCIATES, HELD IN THE NAME OF BRIDGE
INVESTMENT, S.L., BEARING ACCOUNT NUMBERS
XXX‐X3931 AND XXX‐X1784, MAINTAINED AT
HARRIS BANK, ACCOUNT NUMBER XXX‐171‐6,
Defendant,
ONE BEACON INS. CO., et al.,
Claimants‐Appellees.
_____________________________
ART INSURANCE CO., et al.,
Plaintiffs‐Appellees,
v.
AL QAEDA
Defendant.
APPEAL OF: UNITED STATES OF AMERICA
2 Nos. 13‐3732 & 13‐3738
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
Nos. 1:11‐cv‐04175 & 1:12‐cv‐01346 — Matthew F. Kennelly, Judge.
ARGUED SEPTEMBER 11, 2014 — DECIDED APRIL 2, 2015
Before BAUER, MANION, and KANNE Circuit Judges.
KANNE, Circuit Judge. Heinous acts of terror breached the
shores of the Nation on September 11, 2001. Approximately
3,000 innocents lost their lives, affecting countless other per‐
sons, communities, and businesses. In the aftermath of that
tragic day, Congress sought to provide victims with a work‐
able means to recover their losses. So it passed the Terrorism
Risk Insurance Act (“TRIA”) of 2002, a sweeping statute that
authorizes execution on blocked assets that are seized or fro‐
zen by the United States, in satisfaction of judgments against
terrorists.
That statute is the focus of this dispute. Were this Court
bound by TRIA’s noble purpose alone, our judgment, no
doubt, would be favorable to Appellees. They are victims of
terror, after all, and they hold a judgment against al Qaeda
for their $2.5 billion subrogation claims. But a statute’s pur‐
pose, no matter how noble or just, cannot defy the unambig‐
uous and plain meaning of its text.
TRIA’s text, on at least two key points, is quite plain: (1)
the only assets subject to execution are blocked assets; and
(2) assets that are subject to a United States Government
(“USG”) license for final payment, transfer, or disposition,
Nos. 13‐3732 & 13‐3738 3
among other requirements, do not qualify as blocked assets.
Because the defendant funds here are subject to such a li‐
cense and have been arrested for civil forfeiture, they do not
qualify as blocked assets under TRIA. Appellees’ claims un‐
der TRIA therefore must fail. Although we find Appellees
possess both constitutional and statutory standing, we nev‐
ertheless vacate the district court’s grant of summary judg‐
ment in favor of Appellees. Appellees cannot prevail on the
merits under TRIA.
I. BACKGROUND
Muhammad Abdallah Abdan Al Ghamdi, also known as
Abu al Tayyeb (“al Tayyeb”), provided financial and mili‐
tary support for al Qaeda. Specifically, he raised money for
al Qaeda’s operations and managed its supply chain in Kan‐
dahar, Afghanistan. His criminal network included, among
others, Osama Bin Laden, Khalid Sheik Mohammed, and
three individuals who participated in the September 11 at‐
tacks.
Beginning in 2003 and continuing through 2005, al
Tayyeb invested a large sum of cash with R.J. O’Brien & As‐
sociates (“RJO”), a financial firm in Chicago. Under the
name “Bridge Investments,” and with the assistance of Mo‐
hammad Qasim al Ghamdi (who served as general manager
of the account), al Tayyeb invested over $26,000,000 in fu‐
tures trading accounts with RJO. Notably, al Qaeda had a
beneficial interest in these accounts.
In less than a year, though, the accounts lost nearly
eighty‐percent of their value. They dwindled to just over
$6,000,000.
4 Nos. 13‐3732 & 13‐3738
For al Tayyeb, matters only got worse. Saudi Arabian au‐
thorities arrested him in June 2006, thwarting his plans to
attack Saudi Arabia and the United States. Then, on June 18,
2006, the U.S. Department of the Treasury (“DOT”), Office of
Foreign Assets Control (“OFAC”), blocked his RJO invest‐
ments—then totaling $6,226,355—pending investigation. In
procuring the block, OFAC exercised its authority under Ex‐
ecutive Order 13224 of September 23, 2001, the International
Emergency Economic Powers Act, Title 50, United States Code, Section 1701
et seq., and the Global Terrorism Sanc‐
tions Regulations, 31 Code of Federal Regulations, Part 594.
On June 19, 2011, while the funds were still blocked, the
United States filed a verified complaint in the Northern Dis‐
trict of Illinois seeking forfeiture of the funds under 18 U.S.C. § 981
(a)(1)(G)(I), (iv).1 That complaint was the catalyst for this dispute. It revealed the existence of al Tayyeb’s blocked funds, which, until that time, had been designated as classified by the United States. The press soon caught wind; one newspaper ran a story on the defendant funds within three days. See Annie Sweeney, Al‐Qaida figure invest‐ ed with Chicago firm, Chicago Tribune, June 22, 2011, at 1:5. Claimants‐Appellees (“Appellees”) took notice. Appellees are comprised of groups of insurance compa‐ nies that paid more than $2.5 billion in property‐damage and 1 This statute renders “all assets, foreign or domestic … of any individu‐ al, entity, or organization engaged in planning or perpetrating” acts of terrorism either against the United States and its citizens or against for‐ eign governments subject to civil forfeiture.18 U.S.C. § 981
(a)(1)(G)(I),
(iv). Section 983 of Title 18 provides the “[g]eneral rules for civil forfei‐
ture proceedings[,]” a relevant section that we address below.
Nos. 13‐3732 & 13‐3738 5
business‐interruption claims following the September 11 at‐
tacks. After learning of al Qaeda’s ties to the defendant
funds, Appellees filed their own verified claims to the funds.
They cited as their interest a “default judgment as to liabil‐
ity” award issued in their favor (and against al Qaeda) by
the Southern District of New York.
Some further background is necessary. Appellees, along
with several thousand personal‐injury plaintiffs who form a
party to the In re Terrorist Attacks Upon the United States mul‐
ti‐district litigation, initially filed tort claims against al
Qaeda for the September 11 attacks in the Southern District
of New York. That litigation lingered for some time as, un‐
surprisingly, al Qaeda did not enter an appearance or try to
contest the claims. Eventually, on April 7, 2006, the Southern
District of New York entered a default judgment as to liabil‐
ity against al Qaeda, holding it liable for the September 11
attacks. It was this order that Appellees cited as giving them
an interest in the defendant funds.
In any event, after Appellees filed their verified claims
contesting forfeiture in the Northern District of Illinois, the
personal injury plaintiffs got involved. They moved to inter‐
vene in the forfeiture action under Rule 24 of the Federal
Rules of Civil Procedure.
With the filing of all these claims, two related cases were
born: the original forfeiture action in which the United States
sought forfeiture of al Tayyeb’s assets (i.e., the defendant
funds) and the later enforcement action in which Appellees
sought to execute their judgment against those same funds.
Both cases are before us on appeal. We return to the topic of
Appellees’ verified claims.
6 Nos. 13‐3732 & 13‐3738
Appellees’ initial claimed interest in the defendant funds
rested on tenuous ground. For although the Southern Dis‐
trict of New York held al Qaeda liable for Appellees’ dam‐
ages, its April 7, 2006, order did not say for how much. In
short, the New York judgment was incomplete. That fact did
not change until January 25, 2012, when the Clerk of Court
for the Southern District of New York entered final judg‐
ment in the amount of $9,351,247,959.99. We note that the
death of the original MDL judge played a significant role in
the delay of entering final judgment, a fact that is relevant to
our later discussion concerning Appellees’ motion for leave
to amend.
After Appellees filed their verified claims in the Northern
District of Illinois but before they registered their final
judgment against al Qaeda in the Southern District of New
York, the United States moved to strike their claims and an‐
swers in the Northern District of Illinois. In its view, Appel‐
lees lacked the requisite ownership and legal interest in the
defendant funds to participate in the forfeiture proceedings
because their judgment against al Qaeda was not final and
because they secured no lien against the defendant funds.
The Northern District of Illinois initially agreed. It held
that Appellees failed to satisfy their pleading obligations
under both Rule G(5)(a)(i)(B) of the Supplemental Rules for
Admiralty or Maritime Claims and Asset Forfeiture Actions
and the related civil forfeiture statute, 18 U.S.C. § 983
(a)(2)(C)(ii). Labeling Appellees “general unsecured creditor[s],” the district court found that they could not es‐ tablish their interest in the property to be forfeited. United States v. All Funds on Deposit with R.J. O’Brien & Assocs., No. 11 C 4175,2012 U.S. Dist. LEXIS 41309
, at *17 (N.D. Ill. Mar.
Nos. 13‐3732 & 13‐3738 7
27, 2012) (“R.J. O’Brien I”). As a result, Appellees lacked
statutory and prudential standing.2
After making those key findings, the Northern District of
Illinois (1) granted the motion to strike and (2) denied the
personal injury claimants’ motion to intervene. It also denied
Appellees’ motion for leave to amend their complaint, rea‐
soning that because Appellees had not yet secured a lien
against the defendant funds, any amendment could not cure
the statutory standing defect. In a significant footnote, how‐
ever, the district court offered a life raft to Appellees:
The [c]ourt need not consider whether they legally
can serve a citation at this time or, if so, whether it
would be appropriate then to allow the insurance
claimants to amend their claims. Similarly, the [c]ourt
need not consider the effects of [the] Terrorism Risk
Insurance Act of 2002 … on the claimants’ ability to
execute their judgments against the property at issue.
R.J. O’Brien I, 2012 U.S. Dist. LEXIS 41309
, at *23 n.1. Accepting the life raft, Appellees quickly served on the U.S. Marshals Service a citation to discover assets. The United States moved to quash. The district court denied the motion to quash and issued a writ of execution. Recognizing Appel‐ lees’ changed circumstances (namely, their lien), the court found Appellees possessed statutory and prudential stand‐ ing. It also found that any procedural hurdles to standing— imposed by the civil forfeiture statute, see 18 U.S.C. § 983— 2 The district court did not address the issue of constitutional standing at the time it rendered this decision. 8 Nos. 13‐3732 & 13‐3738 were superseded by TRIA’s “[n]otwithstanding any other provision of law” (“notwithstanding”) clause. United States v. All Funds on Deposit with R.J. O’Brien & Assocs.,892 F. Supp. 2d 1038
, 1050–53 (N.D. Ill. 2012) (“R.J. O’Brien II”). The district court then permitted Appellees to amend their claims to reflect their perfected lien on the defendant funds.3Id. at 1053
. And the litigation marched forward.
The United States moved to certify the district court’s de‐
cision for interlocutory appeal. It lost. See United States v. All
Funds on Deposit with R.J. O’Brien & Assocs., Nos. 11 C 4175 &
12 C 1346, 2012 U.S. Dist. LEXIS 189345
, at *11 (N.D. Ill. Dec.
12, 2012) (“R.J. O’Brien III”). The parties then filed cross mo‐
tions for summary judgment. In its motion, the United States
renewed its standing arguments.4
Appellees, for their part, relied on TRIA. In their view,
that statute prioritizes their interest in the defendant funds,
even in the face of a government forfeiture action. Addition‐
ally, Appellees argued that the “notwithstanding” clause
supersedes the procedural oddities of civil forfeiture law.
Invoking the purpose and intent of TRIA, Appellees finally
argued that the defendant funds should be subject to execu‐
tion to satisfy their judgment against al Qaeda. The district
3 This time, the district court addressed the issue of constitutional stand‐
ing; it held they had it. R.J. O’Brien II, 892 F. Supp. 2d at 1049
.
4 The United States also argued Appellees could not execute their judg‐
ment against the defendant funds because TRIA did not waive the sov‐
ereign immunity of the United States, an argument it raises again on ap‐
peal. For reasons discussed below, we need not address this precise issue
here.
Nos. 13‐3732 & 13‐3738 9
court agreed with Appellees’ interpretation of TRIA. It
granted summary judgment in their favor.
Importantly, the district court did so based on the critical
assumption that the defendant funds remained blocked at
the time the parties moved for summary judgment. “[I]t is
undisputed,” the district court noted, “that the assets in
question are ‘blocked,’ a status that is essential for a TRIA
claim to go forward; the government labeled the assets as
such in its complaint.” United States v. All Funds on Deposit
with R.J. O’Brien & Assocs., 982 F. Supp. 2d 830, 844
(N.D. Ill.
2013) (“R.J. O’Brien IV”) (emphasis added).
But six months before the Southern District of New York
had entered final judgment in Appellees’ favor, and more
than two years before the Northern District of Illinois issued
its decision in favor of Appellees, OFAC granted a license to
the Department of Justice (“DOJ”) on July 8, 2011. That li‐
cense permitted the DOJ to “take all necessary actions in fur‐
therance of the … pursuit of [the] civil forfeiture of the [de‐
fendant funds].” Gov’t App’x L.A. 272, ¶ 20. Four days after
OFAC granted the license, the Northern District of Illinois
granted the United States’ application for warrants of arrest
in rem for the defendant funds. The United States executed
the warrants on July 12, 2011, and took possession of the
funds that same day.
Herein lies the rub. TRIA provides in pertinent part:
Blocked asset.—The term ‘blocked asset’ means—
(A) any asset seized or frozen by the United States
under section 5(b) of the Trading With the Enemy Act
… or under sections 202 and 203 of the International
Emergency Economic Powers Act … and
10 Nos. 13‐3732 & 13‐3738
(B) does not include property that—
(i) is subject to a license issued by the United
States Government for final payment, transfer, or dis‐
position by or to a person subject to the jurisdiction of
the United States in connection with a transaction for
which the issuance of such license has been specifical‐
ly required by statute other than the International
Economic Powers Act … or the United Nations Partic‐
ipation Act of 1945 … .
Pub. L. No. 107‐297, § 201(d)(2) 116 Stat. 2322
, 2339–40 (codi‐ fied as a note to28 U.S.C. § 1610
) (emphasis added).
The Northern District of Illinois recognized the existence
of the license in its decision (it was stipulated by all parties
to be an undisputed fact), but it nonetheless treated the
funds as if they remained blocked. See R.J. O’Brien IV, 982 F.
Supp. 2d at 839‐40. As we noted before, whether the funds
are blocked is the decisive issue. That is because, per TRIA’s
text, victims of terror may only execute on “blocked” funds.
We address this issue in detail below.
Before doing so, however, we address the standing ar‐
guments again raised by the United States. These are thresh‐
old issues. Cf. United States v. $304,980.00 in United States
Currency, 732 F.3d 812, 818
(7th Cir. 2013) (“[W]ithout a case
or controversy under Article III, we have no authority to
proceed to the merits.”).
II. ANALYSIS
A. Standing
Whether constitutional, statutory, or prudential in form,
standing is a question of law that we review de novo. Winkler
Nos. 13‐3732 & 13‐3738 11
v. Gates, 481 F.3d 977, 982
(7th Cir. 2007). We begin our anal‐
ysis with a discussion of constitutional standing.
1. Constitutional Standing
Standing under Article III “is a threshold question in eve‐
ry federal case … .” Warth v. Seldin, 422 U.S. 490, 498
(1975). “A federal court’s jurisdiction can be invoked only … when the plaintiff … has suffered ‘some threatened or actual injury resulting from the putatively illegal action[.]’”Id.
at 499 (quoting Linda R. S. v. Richard D.,410 U.S. 614
, 617 (1943)). Although we have described standing as “undemanding,” Family & Children’s Ctr., Inc. v. School City of Mishawaka,13 F.3d 1052, 1058
(7th Cir. 1994), neither intellectual curiosity nor purely psychological harm suffices to establish it. United States v. 5 S 351 Tuthill Rd, Naperville, Ill.,233 F.3d 1017, 1022
(7th Cir. 2000) (“Similarly, simple indignation, or an impact
on one’s opinions, aspirations or ideology do not suffice to
establish standing.”) (citations and internal quotations omit‐
ted).
Claimants establish constitutional standing in a forfeiture
proceeding just as they would in any other proceeding. They
must allege (1) an immediate threat of injury that is (2) fairly
traceable to the government’s conduct, and (3) which a fa‐
vorable federal court decision likely would redress or reme‐
dy. Id.
(citing Lujan v. Defenders of Wildlife,504 U.S. 555
, 561–
62 (1992)).
Importantly, “a claimant need not ‘establish that a right
of his has been infringed; that would conflate the issue of
standing with the merits of the suit.’” $304,980.00 in United
States Currency, 732 F.3d at 818
(quoting Aurora Loan Servs., Inc. v. Craddieth,442 F.3d 1018, 1024
(7th Cir. 2006)). A claim‐ 12 Nos. 13‐3732 & 13‐3738 ant need only establish “a colorable claim to such a right.”Id.
(emphasis in original). A colorable claim, we emphasize, is merely an arguable one. Underscoring this low bar, we have described it as “one that is not frivolous.” S. Ill. Carpenters Welfare Fund v. Carpenters Welfare Fund,326 F.3d 919, 923
(7th Cir. 2003) (citing Nuema, Inc. v. AMP, Inc.,259 F.3d 864, 878
(7th Cir. 2001)).
Here, Appellees allege an immediate and actual threat of
injury that is far from frivolous—the impending forfeiture of
seized terrorist funds to which they have an arguable claim.
TRIA, the source of that claim, provides in pertinent part:
Notwithstanding any other provision of law … in
every case in which a person has obtained a judgment
against a terrorist party on a claim based upon an act
of terrorism, or for which a terrorist party is not im‐
mune … the blocked assets of that terrorist party (in‐
cluding the blocked assets of any agency or instru‐
mentality of that terrorist party) shall be subject to ex‐
ecution or attachment in aid of execution in order to
satisfy such judgment to the extent of any compensa‐
tory damages for which such terrorist party has been
adjudged liable.
Pub. L. No. 107‐297, 201(a), 116 Stat. 2322
, 2337 (codified as a note to28 U.S.C. § 1610
).
Appellees fit within this ambit. They are victims of ter‐
rorism who hold an unsatisfied judgment against al Qaeda, a
terrorist party, in the amount of $9,351,247,959.99. That sum
flows from al Qaeda’s September 11 attacks, which harmed
Appellees by causing them to compensate their insured for
massive property‐damage and business‐interruption claims.
Nos. 13‐3732 & 13‐3738 13
To be sure, the specific defendant funds at issue belonged to
al Tayyeb. But he was a key member of al Qaeda, a named
terrorist party who both parties agree holds a beneficial in‐
terest in the defendant funds.
Collectively, these facts are sufficient to formulate Appel‐
lees’ arguable claim to the defendant funds. Cf. John G. Rob‐
erts, Jr., Comment: Article III Limits on Statutory Standing, 42 Duke L.J. 1219
, 1228 (1993) (“Article III injury may exist sole‐
ly by virtue of statutes creating legal rights, the invasion of
which creates standing.”) (internal quotations and citations
omitted).
The United States disagrees. It argues that Appellees’
threat of injury is too speculative to establish constitutional
standing. It is wrong. Appellees are akin to the claimant in 5
S 351 Tuthill Rd. There, a beneficiary of a land trust chal‐
lenged the government’s attempt to forfeit the land that was
the subject of the trust. Id. at 1021
. We found that he pos‐ sessed standing, as the forfeiture action would have de‐ prived him of proceeds from the future sale of the land.Id. at 1024
. Even though the value of those land proceeds was un‐ known—we noted the possibility of a “peppercorn” valua‐ tion—the plaintiff could bring his claim because the poten‐ tial harm was “more than intellectual, psychological or ideo‐ logical.”Id.
at 1021–22.
So it is here. Appellees secured a default judgment as to
liability against al Qaeda before the United States com‐
menced its forfeiture action. That their judgment had not yet
been reduced to a monetary sum by the time they filed their
verified claims does not render their threat of injury specula‐
tive or any less real. Should Appellees not prevail below,
their harm, like the harm to the claimant in 5 S 351 Tuthill
14 Nos. 13‐3732 & 13‐3738
Rd., would be more than intellectual, psychological, or ideo‐
logical. It would be financial, worth far more than the pep‐
percorn we conjured in 5 S 351 Tuthill Rd. And although the
fraction at stake may be small—$6 million is but a tiny mor‐
sel of their billions in damages—the harm is nonetheless
concrete.
Turning from the threat of injury (standing factor one) to
traceability and availability for redress (standing factors two
and three), these funds would redress Appellees’ multi‐
billion‐dollar losses sustained in the aftermath of the Sep‐
tember 11 attacks. The potential harm derived from the for‐
feiture of the funds is fairly—and in this case, directly—
traceable to the United States’ conduct, particularly given
the United States’ verified complaint for forfeiture. And fi‐
nally, a favorable federal court decision would afford Appel‐
lees the long‐awaited opportunity to commence satisfaction
(however partial) of their judgment against al Qaeda. Each
factor having been satisfied, we find Appellees possess con‐
stitutional standing. There is a case or controversy before us.
U.S. Const. art. III, § 2.
2. Statutory Standing under TRIA
Even though Appellees possess constitutional standing,
we may nevertheless decline to hear this case if Appellees do
not “fall within the zone of interests protected by the law in‐
voked.” Allen v. Wright, 468 U.S. 737, 751
(1984). This is a question of statutory standing, Lexmark Int’l, Inc. v. Static Control Components, Inc.,134 S. Ct. 1377
, 1386–87 (2014), and
we address it now.
TRIA plainly contemplates this type of action. Congress
passed this statute to provide victims of terror, like Appel‐
Nos. 13‐3732 & 13‐3738 15
lees, with a workable means to recover their losses. We need
not resort to legislative history to deduce this conclusion;
TRIA’s preamble states it is designed “[t]o ensure the con‐
tinued financial capacity of insurers to provide coverage for
risks from terrorism.” Pub. L. No. 107‐297. And that is what
Appellees are trying to do—recover their significant finan‐
cial losses caused by al Qaeda’s September 11 attacks. Such
recovery would ensure their continued financial capacity,
while incentivizing grants of much needed coverage for to‐
day’s terrorism‐related risk. We hold that Appellees are
therefore within the zone of interests that TRIA protects.
Our zone‐of‐interests inquiry ordinarily would be con‐
fined to one statute. See Air Conf. v. Am. Postal Workers Union,
498 U.S. 517
, 523–24 (1991) (“[T]he plaintiff must establish that the injury he complains of (his aggrievement, or the ad‐ verse effect upon him) falls within the ‘zone of interest’ sought to be protected by the statutory provision whose vio‐ lation forms the legal basis for his complaint.”) (emphasis in original). But this is no ordinary case. Because this appeal involves two actions, both of which implicate rules of forfei‐ ture, we must also determine whether Appellees fall within the zone of interests protected by18 U.S.C. § 983
.
3. Statutory Standing under Civil Forfeiture
To establish statutory standing in a civil forfeiture pro‐
ceeding, a claimant must adhere to the procedural require‐
ments set forth in the Supplemental Rules for Admiralty or
Maritime Claims and Asset Forfeiture Actions. See United
States v. $487,825 in U.S. Currency, 484 F.3d 662
, 664–65 (3d Cir. 2007). These pleading requirements exist to “force claimants to come forward as quickly as possible after the initiation of forfeiture proceedings, so that the court may 16 Nos. 13‐3732 & 13‐3738 hear all interested parties and resolve the dispute without delay, and to minimize the danger of false claims by requir‐ ing claims to be verified or solemnly affirmed.” United States v. $8,221,877.16 in United States Currency,330 F.3d 141
, 150
n.9 (3d Cir. 2003) (internal quotation marks and citations
omitted).
Here, the procedural requirements at issue are filing
deadlines and interest statements concerning the defendant
funds. See generally Fed. R. Civ. P. Supp. R. G(5). Additional‐
ly, the United States argues that Appellees are not innocent
owners—an affirmative defense “to the confiscation of assets
of suspected international terrorists … .”5 18 U.S.C. § 987
(a)(2). According to the United States, these deficiencies
keep Appellees outside civil forfeiture’s zone of interest.
To begin, a claimant has sixty days after the United States
commences a forfeiture proceeding to assert an interest in
the defendant property, provided the United States pub‐
lished notice of its forfeiture proceeding “on an official in‐
ternet government forfeiture site.” Fed. R. Civ. P. Supp. R.
G(a)(ii)(B). If the United States failed to send direct notice to
a claimant or his attorney, two additional provisions also al‐
low for a sixty‐day filing deadline. Fed. R. Civ. P. Supp. R.
G(a)(ii)(C)(1)–(2). Rule G further requires a claimant to state
his interest in the property subject to forfeiture. A claimant
5 The district court treated innocent ownership as an issue concerning
prudential standing. But in more than one location, the civil forfeiture
statute expressly provides for the defense of innocent ownership. See 18 U.S.C. §§ 983
(d)(1)–(3), 987(a)(2). Accordingly, we discuss it as a matter
of statutory standing.
Nos. 13‐3732 & 13‐3738 17
who asserts an interest in the defendant funds must identify
the specific property claimed, identify the claimant, and
state the claimant’s interest in the property. Fed. R. Civ. P.
Supp. R. G(a)(i)(A)–(B).
The United States does not quibble with Appellees’ orig‐
inal filing date. Appellees filed their initial claims on August
19, 2011, sixty days after the United States commenced its
forfeiture action. Instead, the United States takes issue with
Appellees’ amended verified claims. These claims, it argues,
“were more than seven months delinquent.” (Appellant’s Br.
29.) In making this argument, of course, the United States
keeps Appellees’ filing clock running, discounting entirely
the filing of their original verified claims and the district
court’s order permitting Appellees to amend those claims.
We do not accept this tally of time. The district court act‐
ed within its discretion when it allowed Appellees to amend
their claims. See United States v. U.S. Currency, in the amount
of $103,387.27, 863 F.2d 555
, 563 (7th Cir. 1988). Having been
granted a motion to amend their verified claims, Appellees
did not offend the filing deadlines.
As for Appellees’ stated claims of interest, it is undisput‐
ed that Appellees missed the mark when they initially filed
their claims. The district court correctly noted that, without
either a final judgment entered or lien secured, Appellees
were nothing more than “general unsecured creditors” when
they first filed their claims. But once again, the district court
acted within its discretion when it allowed Appellees to
amend their claims.
As to this point, we remind the United States that the
Federal Rules of Civil Procedure are always in play, even in
18 Nos. 13‐3732 & 13‐3738
the midst of civil forfeiture actions. See $8,221,877.16 in Unit‐
ed States Currency, 330 F.3d at 149 (“Parties to civil forfeiture
proceedings are the servants of two procedural masters: the
Supplemental Rules devised for … in rem proceedings, and
the generally applicable Federal Rules of Civil Procedure.”).
Rule 15 expressly provides that a “court should freely give
leave [to amend a pleading] when justice so requires.” Fed.
R. Civ. P. 15(a)(1)(2).
We find that justice required that the court grant Appel‐
lees leave to amend. By keeping the defendant funds classi‐
fied, and therefore secret, until the moment it commenced its
forfeiture action, the United States made it nearly impossible
for Appellees to satisfy their pleading requirements under
Rule G. Appellees had little if any time to secure a lien and
perfect their interest by the time the funds were made pub‐
lic. Worse, the original MDL judge died, greatly lengthening
the time it took for the Southern District of New York to en‐
ter final judgment in favor of Appellees (and against al
Qaeda). Understanding these unusual facts, and recognizing
the flattening effect of TRIA’s “notwithstanding” clause (dis‐
cussed below), the district court properly exercised its dis‐
cretion and permitted Appellees to amend their claims. As a
result, this procedural requirement, like the filing deadline
requirement, poses no bar to Appellees’ statutory standing
under civil forfeiture.
That leaves us with innocent ownership. Innocent own‐
ership is a defense to civil forfeiture. 18 U.S.C. § 983
(d)(1); see also United States v. Bakjakajian,524 U.S. 321, 332
(1998) (not‐ ing “forfeiture … cannot be imposed upon innocent own‐ ers.”). It prevents civil forfeiture so long as a claimant can prove by a preponderance of the evidence that “he did not Nos. 13‐3732 & 13‐3738 19 know about or consent to the illegal use” of the property subject to forfeiture. 5 S Tuthill Rd.,233 F.3d at 1026
; see also18 U.S.C. § 983
(d)(1), (2)(A)(ii) (noting the defense is also triggered when, “upon learning of the conduct … [the claimant] did all that reasonably could be expected under the circumstances to terminate such use of the property”). In the terrorism‐forfeiture context, “[a]n owner of property that is confiscated under any provision of law … may … assert[] as an affirmative defense that the innocent owner provisions of section 983(d) of title 18, United States Code, apply to the case.”18 U.S.C. § 987
(a)(2).
The United States argues that Appellees cannot satisfy
this requirement. As a result, the argument goes, Appellees
fall outside the zone of interests protected by civil forfeiture
and do not satisfy statutory standing.
We have observed that “a rather expansive zone of inter‐
ests is protected by the innocent ownership provision” of
forfeiture law. 5 S 351 Tuthill Rd., 233 F.3d at 1023
(quoting United States v. U.S. Currency, $81,000,189 F.3d 28, 34
(1st Cir. 1999)). The problem for Appellees is that, despite this expansive zone, innocent ownership only applies to two types of claimants: (1) those who enjoyed an ownership in‐ terest in the property at the time of the event triggering for‐ feiture; and (2) those who acquired an ownership interest in the property after the triggering event as bona fide purchas‐ ers or sellers for value (“BFPV”) without knowledge that the funds were subject to forfeiture. See18 U.S.C. §§ 983
(d)(2)(A), (3)(A). Neither of those applies here.
Regarding the first definition, al Tayyeb deposited his
funds beginning in 2003 and continuing through 2005. As‐
suming for the sake of argument that Appellees’ default
20 Nos. 13‐3732 & 13‐3738
judgment as to liability against al Qaeda was sufficient for
them to acquire an ownership interest in the defendant
funds, the Southern District of New York did not issue that
order until April 7, 2006, a date that comes well after al
Tayyeb’s deposits with RJO ceased.
That means qualifying as BFPVs is the only way for Ap‐
pellees to satisfy the affirmative‐defense requirement and
enter the zone of interests protected by the statute. Appel‐
lees, however, cannot do that. Although Appellees acquired
their interest in the defendant funds after the acts giving rise
to the forfeiture occurred, they did not purchase or sell any‐
thing. They simply seek to recover their losses, an impossi‐
ble goal under this statutory regime. The civil forfeiture
statute does not contemplate that kind of relief. Without
some mechanism that enables Appellees to overcome this
final obstacle, Appellees would be unable to participate in
the forfeiture proceeding.
i. The Mechanism ‐ TRIA
Innocent ownership brings us, at long last, to TRIA. We
find TRIA’s broad “notwithstanding” clause supersedes the
innocent ownership requirement of civil forfeiture. Put dif‐
ferently, it cures Appellees’ standing defect under civil for‐
feiture law. Several reasons compel our conclusion. First and
foremost, once the United States commences a forfeiture ac‐
tion, it is impossible for qualified albeit unrelated victims of
terror (here, the insurance companies) to comply with civil
forfeiture’s innocent owner requirement and, at the same
time, execute against the blocked funds. This conflict re‐
quires the innocent owner provision to yield in the face of
TRIA’s broad “notwithstanding” clause. A clause, we em‐
phasize, that expressly permits Appellees or any person who
Nos. 13‐3732 & 13‐3738 21
“has obtained a judgment against a terrorist party on a claim
based upon an act of terrorism,” to execute on, or attach in
aid of execution on, the blocked funds of the terrorist party
to satisfy their judgment, “[n]otwithstanding any other provi‐
sion of law[.]” Pub. L. No. 107‐297, § 201(a), 116 Stat. 2322
,
2377 (emphasis added).
We have recognized the potent power of a “notwith‐
standing” clause before. See Joren v. Napolitano, 633 F.3d 1144, 1146
(7th Cir. 2010) (“[T]he use of a “notwithstanding” clause signals Congressional intent to supercede conflicting provisions in any other statute.”) (citing Cisneros v. Alpine Ridge Grp.,508 U.S. 10, 18
(1993)) (emphasis added). Where a “notwithstanding” clause is cabined by terms limiting its scope, we have recognized those limits as well. See Citizens Elec. Corp. v. Bituminous Fire & Marine Ins. Co.,68 F.3d 1016, 1019
(7th Cir. 1995) (finding the “notwithstanding” clause of CERCLA,42 U.S.C. § 9607
(a), refers only to substantive lia‐
bility and therefore has limited applicability) (citations omit‐
ted). In TRIA, there are no terms that limit this clause’s
scope.
To the contrary, words of broad application bookend
TRIA’s “notwithstanding” clause. The statute reads in perti‐
nent part: “In general.—Notwithstanding any other provision
of law … in every case in which a person has obtained a
judgment … .” Pub. L. No. 107‐297, § 201(a), 116 Stat. 2322
, 2377 (emphasis added). The only textual limitation to this broad power is found in subsection (b), which provides for discretionary presidential waivers, on an asset‐by‐asset ba‐ sis, when the property is “subject to the Vienna Convention on Diplomatic Relations or the Vienna Convention on Con‐ 22 Nos. 13‐3732 & 13‐3738 sular Relations.”Id.
But neither party contends that subsec‐
tion applies here.
For all these reasons, the district court correctly relied on
TRIA in finding that Appellees could proceed with their
claims notwithstanding the conflicting provisions of civil
forfeiture. Forfeiture’s standing requirements cannot over‐
come TRIA’s sweeping mechanism for recovery. In so hold‐
ing, we pass no judgment on the merits of Appellees’ claims
under TRIA.6 For that substantive issue is discussed below.
At this point, we simply open the doors for Appellees to en‐
ter the courthouse.
Fighting this conclusion, the United States asks us to
adopt what it views as persuasive precedent from the Fifth
Circuit. See generally United States v. Holy Land Found. for Re‐
lief and Dev., 722 F.3d 677
(5th Cir. 2013) (“Holy Land”). While
that case is instructive, particularly on the status of re‐
strained funds subject to an OFAC license, we are uncon‐
vinced that the Fifth Circuit reads the “notwithstanding”
clause more narrowly than we do.
In Holy Land, the court held TRIA’s “notwithstanding”
clause “does not trump” provisions of the criminal forfeiture
statute, 21 U.S.C. § 853
, a statute similar to its civil counter‐ part.Id. at 687
. But the Fifth Circuit rendered this holding in response to arguments that boldly contravened the plain text of TRIA.Id.
Specifically, the claimants there argued that
TRIA superseded provisions within itself, rendering the
6 In particular, we assume at this stage of our analysis that Appellees
have a viable (i.e., not frivolous) case that the funds remain blocked and
subject to attachment under TRIA.
Nos. 13‐3732 & 13‐3738 23
“blocked assets” requirement of the statute unnecessary. In
rejecting this argument, the Fifth Circuit reasoned:
The presence of the “notwithstanding” clause does
not alter our responsibility to abide by the definitions
provided by Congress in the same statute. Our role in
interpreting the TRIA is to “[g]ive effect to the text
congress enacted,” not to “rewrite the statute to re‐
flect a meaning we deem more desirable.”
Id.
at 688 (quoting Ali v. Fed. Bureau of Prisons,552 U.S. 214, 228
(2008)). Appellees make no such argument here. In fact,
their argument rests on the assumption that the defendant
funds remain blocked—the same assumption adopted by the
district court when it granted summary judgment in their
favor. Accordingly, we do not find Holy Land to be persua‐
sive on the scope of TRIA’s “notwithstanding” clause.
Having found that Appellees possess both constitutional
and statutory standing, we now proceed to the merits of
their case under TRIA. Appellees’ claims rise and fall with
the text of that statute.
B. The Status of the Defendant Funds under TRIA
The “cardinal canon” of statutory interpretation is that
we look first to the text of the statute. Conn. Nat’l Bank v.
Germain, 503 U.S. 249, 253
(1992) (“[C]ourts must presume that a legislature says in a statute what it means and means in a statute what it says”); see also 2A N. Singer, Sutherland Statutory Construction § 46.03, at 82 (4th ed. 1984) (“What a legislature says in the text of a statute is considered the best evidence of the legislative intent or will.”). When a statute is unambiguous, our inquiry starts and stops at the text. Suesz v. Med‐1 Solutions, LLC,757 F.3d 636, 659
(7th Cir. 2014) (en
24 Nos. 13‐3732 & 13‐3738
banc) (Kanne, J., dissenting) (“Absent ambiguity, the first
canon [of statutory interpretation] is also the last: ‘judicial
inquiry is complete.’”) (citation omitted).
Here, the relevant text of the statute is unambiguous. For
ease of reference, we replicate it once more:
Notwithstanding any other provision of law, and ex‐
cept as provided in subsection (b) [of this note], in
every case in which a person has obtained a judgment
against a terrorist party on a claim based upon an act
of terrorism, or for which a terrorist party is not im‐
mune under section 1605A or 1605(a)(7) … the blocked
assets of that terrorist party (including the blocked as‐
sets of any agency or instrumentality of that terrorist
party) shall be subject to execution or attachment in
aid of execution in order to satisfy such judgment to
the extent of any compensatory damages for which
such terrorist party has been adjudged liable.
Pub. L. No. 107‐297, § 201(a), 116 Stat. 2322
, 2337 (emphasis
added).
By its terms, TRIA allows victims of terror to execute on‐
ly on blocked assets. This point is beyond dispute. See Minis‐
try of Defense and Support for the Armed Forces of the Islamic Re‐
public of Iran v. Elahi, 556 U.S. 366, 374
(2009) (observing that TRIA permits “a person with a terrorism‐related judgment to attach an asset … provided the asset was a “blocked asset”) (emphasis added); Estate of Heiser v. Islamic Republic of Iran,807 F. Supp. 2d 9
, 18 n.6 (D.D.C. 2011) (“The TRIA … applies
only to blocked assets”).
Relevantly then, TRIA defines blocked assets as:
Nos. 13‐3732 & 13‐3738 25
(A) any asset seized or frozen by the United States under
section 5(b) of the Trading With the Enemy Act … or
under sections 202 and 203 of the International Emer‐
gency Economic Powers Act … and
(B) does not include property that—
(i) is subject to a license issued by the United States
Government for final payment, transfer, or disposi‐
tion by or to a person subject to the jurisdiction of the
United States in connection with a transaction for
which the issuance of such license has been specifical‐
ly required by statute other than the International
Economic Powers Act … or the United Nations Partic‐
ipation Act of 1945 … .
Pub. L. No. 107‐297, § 201(d)(2), 116 Stat. 2322
, 2339–40 (em‐
phasis added). It is this section that engenders strong dis‐
pute between the parties.
According to Appellees, despite the fact that OFAC is‐
sued a license to the DOJ to “take all necessary actions in
furtherance of the … pursuit of [the] civil forfeiture of the
[defendant funds],” the defendant funds remain blocked
within the meaning of TRIA. That the funds have also been
arrested does nothing to change this status, they argue. Their
first argument in support of this conclusion rests, in part, on
the verified complaint filed by the United States. There, the
United States admitted that OFAC blocked the defendant
funds on June 18, 2006. Secondarily, Appellees rely on the
fact that the district court treated the defendant funds as
blocked in its opinion below.
To the extent that this argument sounds in law‐of‐the‐
case doctrine, we reject it. That the United States or the dis‐
26 Nos. 13‐3732 & 13‐3738
trict court, at one point or another, found the funds to be
blocked does not render them blocked now. Holy Land, 722 F.3d at 688
(“The fact that the government and the parties treated and considered the assets as blocked throughout the criminal trial does not make them so.”) (internal citations and quotations omitted). TRIA, moreover, “does not guaran‐ tee that any blocked assets will in fact be available when a particular victim seeks to execute on a judgment.” Smith v. Fed. Reserve Bank of N.Y.,346 F.3d 264
, 271 (2d Cir. 2003). Be‐ cause the law of the case doctrine is discretionary, Hicks v. Resolution Trust Corp.,970 F.2d 378, 381
(7th Cir. 1992), and “is not designed to perpetuate error,”id.,
we will not consid‐
er the funds blocked if they are not in fact blocked.
Appellees next argue that because the OFAC license itself
was not attached to the record, it cannot form a basis for re‐
versal. In support, Appellees rely on United States v. Alcantar,
83 F.3d 185
, 190–91 (7th Cir. 1996), wherein we denied a mo‐ tion to supplement the record with new evidence on appeal.Id.
But Appellees’ reliance on Alcantar is misplaced. Alcantar
is a criminal case that addressed alleged errors at trial such
as sufficiency of the evidence and ineffective assistance of
counsel (“IAC”). Id.
at 189–91. Attempting to preserve his claim of IAC, the appellant there moved to supplement the appellate record with transcripts from his grand jury pro‐ ceeding.Id. at 190
. We denied the appellant’s motion, rea‐ soning that because those materials were never before the district court, we could not consider them on direct appeal.Id.
(citing Fed. R. App. 10(e)) (additional citations omitted). We subsequently encouraged the appellant to include the Nos. 13‐3732 & 13‐3738 27 matters in his collateral proceeding.Id. at 191
. Those facts
are far removed from the case at bar.
In characterizing the OFAC license as new evidence, Ap‐
pellees look past the Stipulation of Undisputed Facts. There,
Appellees stipulated that OFAC issued a license concerning
the defendant funds. Appellees also stipulated to the broad
terms of this license, which expressly authorized the DOJ to
“take all necessary actions in furtherance of the … pursuit of
[the] civil forfeiture of the [defendant funds.” Gov’t App’x
L.A. 272, ¶ 20 (emphasis added). There is nothing new about
this evidence. The stipulation binds the parties, and is on
point. Had the parties not stipulated to the existence and the
relevant contents of the OFAC license, we may have reached
a different conclusion. For we agree with the dissent that it is
odd for the United States to place so much stock in some‐
thing that is not a part of the record. But the presence of the
stipulation, which includes a stipulation to the broad, opera‐
tive terms of the license, quells any concern regarding the
completeness of the record.
Indeed, the stipulation provides this court with ample in‐
formation. For example, the stipulation tells us that OFAC
issued the license. That means it qualifies as “a license issued
by the United States Government … .” 116 Stat. 2322
, 2339. The stipulation next tells us that the license was issued to the DOJ. That means “a person subject to the jurisdiction of the United States” is its intended recipient. Id; see also116 Stat. 2322
, 2326 (defining person, in part, as a “governmental unit”). As for its scope, the stipulation expressly contem‐ plates a broad one: it allows the DOJ to “take all necessary actions in furtherance of” civil forfeiture. Gov’t App’x L.A. 272, ¶ 20. That satisfies the purpose criterion, which requires 28 Nos. 13‐3732 & 13‐3738 the license to be “for final payment, transfer, or disposition.”116 Stat. 2322
, 2339.
A license to effect forfeiture is, at bottom, a license for fi‐
nal transfer or disposition. Cf. Holy Land, 722 F.3d at 687
. Our conclusion on this latter point rests not only on the Fifth Cir‐ cuit’s implied decision in Holy Land, but also on the nature of forfeiture itself. Forfeiture, let’s not forget, is both a process and a desired end state. The United States’ desired end state is ownership of al Tayyeb’s funds, a final disposition it pre‐ fers to limbo, or worse, possession by al Qaeda for terrorist operations. That helps explain why, after securing the OFAC license, the United States arrested and took possession of the funds on July 12, 2011. The license at issue enabled that ar‐ rest, just as it ultimately enables the final transfer of the funds from al Tayyeb. As a result, the stipulated terms of this license qualify it as one for “final … transfer, or disposi‐ tion … .”116 Stat. 2322
, 2339.
Each of these critical facts flows directly from the parties’
stipulation to the license, and they weigh in favor of finding
the funds to no longer be “blocked”—at least as TRIA de‐
fines the term. We respectfully disagree, therefore, with the
dissent’s contention that the stipulation is too vague to carry
any real meaning on appeal. The stipulation carries signifi‐
cant meaning. When coupled with the arrested nature of the
funds, it reveals the funds are no longer blocked within the
statutory meaning of TRIA.
Additionally, that the stipulation does not state whether
OFAC issued the license “in connection with a transaction
for which the issuance of such a license has been specifically
required by statute other than the International Emergency
Economic Powers Act … or the United Nations Participation
Nos. 13‐3732 & 13‐3738 29
Act of 1945,” 116 Stat. 2322
, 2339–40, does not alter our con‐
clusion. Whether a certain statute requires the issuance of a
license is a question of law; it need not be addressed by the
parties’ stipulation.
Here, that question of law is not in dispute. Appellees
make no argument on appeal that either the International
Emergency Economic Powers Act (“IEEPA”) exemption or
the United Nations Participation Act of 1945 (“UNPA”) ex‐
emption preserves these funds as blocked, so as to subject
them to attachment under TRIA. Pub. L. No. 107‐297,
§ 201(d)(2)(B)(i), 116 Stat. 2322
, 2339–40. Nor did Appellees develop such an argument before the district court. This is‐ sue, consequently, is deemed waived. Puffer v. Allstate Ins. Co.,675 F.3d 709, 718
(7th Cir. 2014). Nevertheless, the dissent relies heavily on this portion of TRIA. Citing31 C.F.R. §§ 594.101
and 594.502(b), the dissent
essentially contends that IEEPA required the forfeiture li‐
cense because IEEPA blocked the assets. It follows, the dis‐
sent concludes, that the funds must remain blocked (and
subject to attachment under TRIA) because the IEEPA ex‐
emption applies.
Putting to one side the fact that Appellees (or the United
States, for that matter) did not brief this issue, we see things
differently than the dissent does. IEEPA empowers the Pres‐
ident to exercise “emergency economic powers in response
to peacetime crises.” Regan v. Wald, 468 U.S. 222
, 227‐28 (1984). Although OFAC invoked IEEPA, among other au‐ thorities, to block al Tayyeb’s funds on June 18, 2006, its powers under IEEPA are not unlimited: “IEEPA does not authorize the Executive to take title to foreign assets, to regu‐ late purely domestic transactions, to regulate gold or bullion, 30 Nos. 13‐3732 & 13‐3738 or to seize records.” United States v. Ali Amirnazmi,645 F.3d 564
, 572 n.12 (3d Cir. 2011) (citing Regan,468 U.S. at 228
n.8
(citation omitted).7 IEEPA, for example, does not speak of
applications for warrants of arrest in rem. The Supplemental
Rules for Admiralty or Maritime Claims and Asset Forfei‐
ture Actions, on the other hand, do.
The utility of TRIA’s IEEPA exemption, moreover, is re‐
vealed by other circuits that have not applied it under simi‐
lar circumstances. See Holy Land, 722 F.3d at 685
(refraining from applying TRIA’s IEEPA exemption to funds subject to an OFAC license even though the funds there were initially blocked pursuant to IEEPA); Bank of N.Y. v. Rubin,484 F.3d 149
, 150 (2d Cir. 2007) (per curiam) (same). These decisions
are incompatible with the dissent’s view. What is more, once
the United States executed its warrants of arrest in rem, the
funds—at least by that point—were no longer “seized or
frozen” as TRIA contemplates the terms—a threshold re‐
quirement that obviates the dissent’s discussion on this point
altogether. Instead, the funds were seized under civil forfei‐
ture. We cannot overlook that fact.
Appellees next argue waiver. In their view, the United
States waived the issue of the blocked (or unblocked) status
of the defendant funds when it advanced the argument only
in its reply brief before the district court. We reject this ar‐
7 We acknowledge that Congress granted the President additional au‐
thority to confiscate foreign property, subject to certain conditions, when
it amended IEEPA in 2001. See Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terror‐
ism (USA PATRIOT) Act of 2001, Pub. L. No. 107‐56, § 106, 115 Stat. 272
, 277–78 (Oct. 26, 2011). Nos. 13‐3732 & 13‐3738 31 gument as well. It disregards the relevant procedural history of the case, which was impacted by the Fifth Circuit’s deci‐ sion in Holy Land,722 F.3d at 677
.
There, the Fifth Circuit addressed a TRIA action brought
by victims of a Hamas terrorist attack in Jerusalem. Id. at 680
. Specifically, the victims sought to satisfy their judgment against Hamas by executing on the blocked funds of its fundraising wing in the United States—Holy Land Founda‐ tion.Id.
at 680–82. Like here, OFAC issued a license to the United States “to pursue criminal forfeiture of the [blocked] assets … .”Id. at 687
. And like here, the United States re‐ strained (in our case, “arrested”) the “assets to preserve them for potential criminal forfeiture.”Id.
The Fifth Circuit found that the license, coupled with the restrained status of the funds, rendered them unblocked under TRIA.Id.
(cita‐
tions omitted). The United States took notice.
Realizing the relevancy of the Holy Land case, the United
States filed an unopposed motion before the district court to
address its holding before the parties finished briefing their
cross motions for summary judgment. Although the district
court denied the motion, it instructed both parties to address
the case in their remaining briefs. This record belies any
claim that the United States waived the issue of the status of
the funds. The United States acted like a party seeking to
preserve an issue, not waive it. And it did just that.
On the impact of the July 8, 2011, OFAC license and the
July 12, 2011, arrest of the funds, we are persuaded by the
Fifth Circuit’s analysis. These funds are now part of an
OFAC licensing scheme, they are arrested, and they there‐
fore outside the ambit of TRIA. The statute does not “reach
those funds which the government has been given authori‐
32 Nos. 13‐3732 & 13‐3738
zation to control through another means.” Holy Land, 722 F.3d at 685, 688
(observing that “[t]he definition of ‘blocked assets’ set forth in TRIA is narrow”) (emphasis added). Con‐ sequently, and for all the reasons discussed above, Appellees cannot execute on these funds. They are excluded from the definition of “blocked assets” under the statute. Pub. L. No. 107‐297, § 201(d)(2),116 Stat. 2322
, 2339. Other courts are in accord. See Rubin,484 F.3d at 150
(finding assets subject to a general licensing scheme to be unblocked and not subject to attachment under TRIA); Estate of Heiser,807 F. Supp. 2d at 18
n.6 (“Thus, because transactions … are undertaken under an OFAC licensing scheme, they are unblocked and not sub‐ ject to attachment.”). In an effort to prevent this result, Appellees point out that OFAC issues two types of licenses: general licenses and specific licenses. While general licenses may render funds unblocked, specific licenses, they argue, do not. Unfortu‐ nately for Appellees, TRIA does not support this argument. The text of TRIA makes no distinction between—or mention of—“specific” or “general” licenses. Rather, the statute broadly excepts any property subject to “a license issued by the United States Government,” subject to certain conditions, from qualifying as a blocked asset. Pub. L. No. 107‐297, § 201(d)(2),116 Stat. 2322
, 2339–40 (emphasis added).
That leaves the purpose of the statute as Appellees’ last
best hope for recovery. But as we stated before, a statute’s
purpose cannot defy the unambiguous and plain meaning of
its text. See Suesz, 757 F.3d at 659
(Kanne, J., dissenting).
Whereas here, the text leaves no room for debate, we do not
close our eyes to it.
Nos. 13‐3732 & 13‐3738 33
Having found the funds to no longer be blocked (as TRIA
defines the term), Appellees cannot proceed under that stat‐
ute. Consequently, the parties’ arguments concerning TRIA’s
waiver of sovereign immunity are moot. Without any waiver
of sovereign immunity, Appellees cannot attach the defend‐
ant funds, now seized and held by the United States, to satis‐
fy their judgment against al Qaeda. See Dep’t of the Army v.
Blue Fox, 525 U.S. 255, 264
(1999) (“[S]overeign immunity bars creditors from attaching or garnishing funds in the Treasury[.]”); see also Weinstein v. Islamic Republic of Iran,274 F. Supp. 2d 53, 58
(D.D.C. 2003) (“[I]f the property sought to
be attached by plaintiffs is property that (1) has been seized
by the United States from a terrorist party and (2) is present‐
ly held by the United States, it cannot be attached … .”). The
United States’ remaining arguments concerning in custodia
legis, and prior exclusive jurisdiction are moot.
We pause to make some observations. First, we are mind‐
ful of the dissent’s concern regarding the litigation tactics of
the Executive Branch. That the Executive Branch could delay
revealing the existence of these particular funds, and then
employ measures designed specifically to take them outside
the scope of TRIA—a remedial statute—smacks of games‐
manship. But the United States’ approach to litigating this
case falls within the bounds of what Congress permitted
when it enacted this iteration of TRIA. It is not the function
of the courts to disturb the policy judgments of the Legisla‐
tive Branch.
Finally, it is unfortunate, to say the least, that the victims
of September 11 are still seeking relief, all these years later,
for their tragic losses. For that we reason, we are also mind‐
ful of the United States’ concession at oral argument that the
34 Nos. 13‐3732 & 13‐3738
victims of al Qaeda will be allowed to use the remission pro‐
cess to submit claims for relief. If that process proves to be
inadequate, perhaps Congress can revisit TRIA to strengthen
its means of recovery for victims of terror.
III. CONCLUSION
For the foregoing reasons, we find Appellees possess
constitutional and statutory standing. Nevertheless, their ac‐
tions under TRIA ultimately fail. TRIA is no doubt a remedi‐
al statute. Its purpose, however, cannot save a ruling that
offends its text. By the time Appellees filed their initial, veri‐
fied claims, OFAC had already issued its license and the
funds had already been arrested to preserve them for forfei‐
ture. In sum, the funds were no longer blocked. To Appel‐
lees, that result may seem unfair, but it is the only permissi‐
ble reading under the statute. For these reasons, as well as
the reasons discussed above, we VACATE the grant of
summary judgment in favor of Appellees and REMAND this
case with instructions to enter summary judgment in favor
of the United States.
Nos. 13-3732 & 13-3738 35
MANION, Circuit Judge, concurring in part and dissenting in
part.
I agree with the court that the insurance companies have
standing. However, I disagree with the court’s conclusion that
the forfeiture license and the in rem arrest warrants prevent the
insurance companies from recovering the funds. Neither the
forfeiture license nor the arrest warrants changed the status of
the funds as blocked under the Terrorism Risk Insurance Act
(“TRIA”), and the funds remain accessible by the insurance
companies. For these reasons, I respectfully dissent.
I. Blocked funds and TRIA.
The International Emergency Economic Powers Act
(“IEEPA”) gives the President the power to block, i.e., freeze,
assets in response to “any unusual and extraordinary threat,
which has its source in whole or substantial part outside the
United States, to the national security, foreign policy, or
economy of the United States.” 50 U.S.C. §§ 1701
(a), 1702(a)(1)(B); see also Smith v. Fed. Reserve Bank of N.Y.,346 F.3d 264
, 267 (2d Cir. 2003). The United Nations Participation Act (“UNPA”) empowers the President to apply measures to enforce economic and communication sanctions called for by the United Nations Security Council. 22 U.S.C. § 287c. After the terrorist attacks of September 11, 2001, the President invoked these powers to issue Executive Order 13224 to block the assets of designated terrorists, terrorist organizations, and foreign persons who support these terrorists.66 Fed. Reg. 49079
-83 (Sept. 25, 2001). The Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) promulgated the Global Terrorism Sanctions Regulations (“GTSR”) to implement Executive Order 13224.68 Fed. Reg. 34196
-97 (June 6, 2003). “Except as authorized by statutes, regulations, orders, direc- 36 Nos. 13-3732 & 13-3738 tives, rulings, instructions, licenses or otherwise,” funds that are blocked under GTSR “may not be transferred, paid, exported, withdrawn or otherwise dealt in.”31 C.F.R. § 594.201
(a).
“To ensure the continued financial capacity of insurers to
provide coverage for risks from terrorism,” Congress passed
the Terrorism Risk Insurance Act (“TRIA”). Pub. L. No. 107-297, 116
Stat. 2322 (Nov. 26, 2002). In addition to a general
terrorism insurance program, TRIA gives victims of terrorism
the ability to execute judgments on terrorist assets that are
blocked (i.e., “seized or frozen”) under IEEPA. § 201(a), 116
Stat. at 2337. The question before the court is whether the
funds are considered blocked under TRIA. If the funds are
blocked, they are available to satisfy the insurance companies’
judgments. If the funds are instead considered “unblocked”
under TRIA, they are no longer available to satisfy judgments.
The parties stipulated that OFAC blocked the funds on June
18, 2007, pursuant to Executive Order 13224, IEEPA, and
GTSR. Gov’t App’x L.A. 272, 18. This action by OFAC brought
the funds within the ambit of TRIA and made them eligible to
satisfy the judgments of the insurance companies. However,
the parties also stipulated that OFAC issued a license to the
DOJ on July 8, 2011 to “take all necessary actions in furtherance
of the … pursuit of [the] civil forfeiture of the [defendant
funds].” Id. at 20. The license allowed the government to move
forward with its complaint for civil forfeiture, which it filed on
June 19, 2011. In furtherance of the forfeiture action, the district
court issued in rem arrest warrants for the funds on July 12,
2011. The district court took possession of the funds on July 14,
2011. Gov’t App’x L.A. 15. So, the more specific question is
whether the forfeiture license or arrest warrants changed the
Nos. 13-3732 & 13-3738 37
status of the funds under TRIA from blocked to unblocked. As
explained below, neither the forfeiture license nor the arrest
warrants unblocked the funds under TRIA.
II. The effect of the license.
As mentioned, the parties stipulated that OFAC blocked the
funds pursuant to GTSR, 31 C.F.R. § 594.101
, et seq. Those
regulations contain the following provisions:
No regulation, ruling, instruction, or license
authorizes any transaction prohibited under this
part unless the regulation, ruling, instruction, or
license is issued by [OFAC] and specifically
refers to this part. No regulation, ruling, instruc-
tion, or license referring to this part shall be
deemed to authorize any transaction prohibited
by any provision of this chapter unless the
regulation, ruling, instruction, or license specifi-
cally refers to such provision.
31 C.F.R. § 594.502
(b). To put it another way, if OFAC blocked
the assets under GTSR, then OFAC can unblock the assets by
a license only if the license specifically refers to GTSR and the
specific provision used to block the assets. The limitation is
more than a simple requirement to reference the provision that
originally blocked the assets:
No license or authorization contained in or
issued pursuant to those other parts [of the
OFAC chapter] authorizes any transaction pro-
hibited by this part. No license or authorization
contained in or issued pursuant to any other
provision of law or regulation authorizes any
transaction prohibited by this part.
38 Nos. 13-3732 & 13-3738
31 C.F.R. § 594.101
. Therefore, if OFAC blocked the assets
under GTSR, then OFAC can unblock the assets by a license
only if the license is issued under GTSR. For this reason, the
forfeiture license must have been issued pursuant to GTSR if
it was a valid license. Furthermore, a valid license issued under
GTSR is construed narrowly:
Any regulation, ruling, instruction, or license
authorizing any transaction otherwise prohibited
under this part has the effect of removing a
prohibition contained in this part from the
transaction, but only to the extent specifically stated
by its terms.
31 C.F.R. § 594.502
(c) (emphasis added).
Thus, the forfeiture license permitted the DOJ to “take all
necessary actions in furtherance of the … pursuit of [the] civil
forfeiture of the [defendant funds]” and nothing more. Gov’t
App’x L.A. 272, 20. So, although the license unblocked the
funds so that the government could obtain arrest warrants in
furtherance of its civil forfeiture action, the license did not
unblock the funds for the terrorist Muhammad Abdallah
Abdan Al Ghamdi (“al Tayyeb”) or anyone else. Clearly, if the
government fails in its civil forfeiture action, the funds are not
then available to al Tayyeb. In short, the funds are still blocked
for all other purposes. The government concedes this fact. See
Gov’t Reply Br. 18 (“The government, however, has not argued
that OFAC issued a general license completely lifting the order
it imposed in 2007. Rather, OFAC allowed the government to
take all necessary action to subject the defendant funds to
Nos. 13-3732 & 13-3738 39
forfeiture.”). The license, by its terms, did not unblock the
funds for the purposes of TRIA.1
There is, though, a way in which a license can unblock
funds for purposes of TRIA without unblocking the funds
under GTSR. It involves TRIA’s definition of blocked assets
but, as explained below, it does not apply here.2
III. The TRIA license exclusion.
TRIA excludes from its definition of blocked assets prop-
erty that is subject to a license that meets four specific criteria:
the license must be 1) issued by the United States Government;
2) for final payment, transfer, or disposition; 3) for a transac-
tion by or to a person subject to the jurisdiction of the United
States; and 4) specifically required by a statute other than IEEPA
or UNPA. § 201(d)(2)(B)(i), 116 Stat. at 2339–40 (emphasis
added). Assets subject to a license that meets the above criteria
are considered “unblocked” for the purposes of TRIA even
though they are still blocked for other purposes (except, of
course, for whatever purpose is authorized by the license).
There is no dispute that the forfeiture license was issued by the
1
As a general matter, even though TRIA is dependent on IEEPA and
regulations like GTSR to block funds, its mechanisms for attachment
operate outside of those laws. See Estate of Heiser v. Bank of Tokyo Mistubishi
UFJ, 919 F. Supp. 2d 411
, 422–23 (S.D.N.Y. 2013) (accepting representations
by the United States that an OFAC license is not required to authorize the
release of blocked assets subject to TRIA).
2
Although the parties did not argue this issue with specificity on appeal,
they raised the overarching issue of whether the forfeiture license un-
blocked the funds under TRIA. An examination of that issue requires an
examination of TRIA’s definition of blocked assets. Therefore, the issue is
not waived.
40 Nos. 13-3732 & 13-3738
United States and involves a person subject to the jurisdiction
of the United States. So, of the four criteria, only the second
and fourth remain for the court to decide. If the license is either
not for final payment, transfer, or disposition or if the license
is required by either the IEEPA or UNPA, then the funds are
still eligible to satisfy the insurance companies’ judgment. Of
course, had the government disclosed the forfeiture license we
might easily discern the answer. But since the government has
not disclosed it, further analysis is necessary.
A. The stipulated language is insufficient to conclude that
the license is for final disposition.
The stipulated language is too vague to establish that the
forfeiture license is a license for final disposition. True, the
award of the funds to the government according to a final
judgment of forfeiture would be a final disposition. And, it is
conceivable that a license could authorize the government to
take title to the funds only if and when the district court enters
final judgment in the government’s favor. But, the stipulated
language does not say these things. The stipulated language
says only that the license authorizes the DOJ to “take all
necessary actions in furtherance of the … pursuit of [the] civil
forfeiture.” Gov’t App’x L.A. 272, 20. Before the court holds
that the license is for final disposition, it should consider what
the original language of the license might say. What is under-
neath the ellipsis? Does the addition of the second “the”
change the original meaning? Could it be that OFAC autho-
rized the DOJ to take all necessary actions in furtherance of the
filing of a complaint in pursuit of civil forfeiture? Or, perhaps
OFAC authorized the DOJ to take all necessary actions in
furtherance of the restraining orders required for the pursuit of
Nos. 13-3732 & 13-3738 41
civil forfeiture? Until the government discloses the forfeiture
license we will not know.
B. The license was required by IEEPA and UNPA.
Even if the forfeiture license were a license for final
disposition, the assets are not excluded from TRIA’s definition
of blocked assets because the license does not meet the fourth
requirement that the license be required by a statute other than
the IEEPA or UNPA. As explained previously, the forfeiture
license must have been issued under GTSR in order to consti-
tute a valid license. Infra at 37. An examination of GTSR’s
authority reveals that its substantive authority (i.e., its author-
ity for blocking and licensing) is derived from IEEPA and
UNPA. See 31 C.F.R. § 594.101
, Statutory Authority (authority note applicable to entire part); see also68 Fed. Reg. 34196
-97.
Hence, any license issued under GTSR is issued under IEEPA
and UNPA, and any license required by GTSR is required by
IEEPA and UNPA.
It follows that the forfeiture license cannot meet the
requirements of TRIA’s exclusion: To be a valid license, OFAC
must have issued the forfeiture license under GTSR and,
consequently, under IEEPA and UNPA. If so, then the license
was not issued “in connection with a transaction for which the
issuance of such license has been specifically required by
statute other than [IEEPA] or [UNPA]” as required by TRIA’s
exclusion. § 201(d)(2)(B)(i), 116 Stat. at 2339-40 (emphasis
added). If, on the other hand, OFAC did not issue the forfeiture
license under GTSR, then it is not a valid license at all and the
funds are not “subject to a license” as required by TRIA’s
exclusion. Id. at 2339. In either of the only two possible cases
(issued under GTSR or not) the license does not satisfy the
42 Nos. 13-3732 & 13-3738
requirements of TRIA’s exclusion. Consequently, the funds are
not considered unblocked by TRIA’s exclusion.
IV. United States v. Holy Land.
The government invites us to rely on the Fifth Circuit’s
decision in United States v. Holy Land Found. for Relief and Dev.,
722 F.3d 677
(5th Cir. 2013), to hold that since the license unblocked the funds for the purposes of the forfeiture proceed- ing, thereby making them available to any qualified claimant, the funds are no longer blocked under TRIA.3 The Fifth Circuit, however, did not hold that the OFAC license in its case unblocked the assets. Rather, it held that “the government essentially unblocked HLF’s assets when it obtained a restrain- ing order under21 U.S.C. § 853
(e)(1)(A) to pursue the criminal forfeiture of those assets.”Id. at 685
.
The license in Holy Land stated that it “authorized the
government ‘to pursue criminal forfeiture of the assets of the
Holy Land Foundation for Relief and Development (“HLF”)
blocked pursuant to’ Executive Orders 12947 and 13224” and
“further authorized the government to pursue ‘restraining
orders’ in order to preserve the assets for criminal forfeiture.”
Id. at 687
. The plaintiffs in Holy Land could not satisfy their judgment because “[o]nce an indictment had been filed and the assets restrained, victims of terrorism could no longer execute against those assets … TRIA could not be applied to those funds since they no longer qualified as blocked under that statute.”Id.
(citations omitted).
3
From all indications, it appears that the Fifth Circuit in Holy Land had the
benefit of a copy of the forfeiture license in the record, a benefit not
provided by the government in this case.
Nos. 13-3732 & 13-3738 43
The reason given by the Fifth Circuit for this result was
twofold: First, “TRIA specifically limits the definition of
‘blocked’ assets to those that are seized or frozen under … the
Trading with the Enemy Act or … IEEPA.” Id. at 685
. And, second, TRIA “does [not] reach those funds which the govern- ment has been given authorization to control through another means.”Id.
In other words, because the government was given
authorization to control the funds in Holy Land through the
restraining orders, the Fifth Circuit held that the funds were no
longer blocked under IEEPA.4 And, since the funds were no
longer blocked under IEEPA, they were no longer reachable by
TRIA.
The Fifth Circuit’s conclusion is wrong, and the reason why
should be obvious from the discussion above. The forfeiture
license in Holy Land never unblocked the funds under IEEPA.
Rather, despite the fact that the funds were still blocked under
IEEPA, the license allowed the forfeiture action to proceed. The
Fifth Circuit stated this exactly, but did not recognize the
inconsistency: “Notwithstanding the status of HLF’s assets as
blocked, the government’s receipt of a license from OFAC
restrained those assets and permitted the government to
proceed with the criminal forfeiture process.” Id. at 687
(emphasis added). Similarly here, as the government concedes, OFAC did not issue a license completely lifting its blocking order imposed in 2007. Instead, it issued a specific license allowing for the government’s forfeiture action and nothing more. Therefore, Holy Land provides no reason to hold that the license or the arrest warrants unblocked the funds. 4 The assets in Holy Land were blocked under IEEPA, not the Trading With the Enemy Act. Holy Land,722 F.3d at 685
.
44 Nos. 13-3732 & 13-3738
Another reason not to accept the Fifth Circuit’s conclusion
is that it provided no authority for its premise that TRIA
cannot reach those funds which the government has been
given authorization to control through other means. The Fifth
Circuit did cite the D.C. District Court and Second Circuit as
authorities which—the Fifth Circuit thought—have decided
that assets subject to licenses are unblocked under TRIA. Id.
(citing Estate of Heiser v. Islamic Republic of Iran,807 F. Supp. 2d 9
, 18 n.6 (D.D.C. 2011), and Bank of N.Y. v. Rubin,484 F.3d 149
,
150 (2d Cir. 2007)). An examination of both cases, however,
reveals that they were not decided as the Fifth Circuit under-
stood.
In Estate of Heiser, the plaintiffs sued the Telecommunica-
tions Company of Iran under the Foreign Sovereign Immuni-
ties Act (“FSIA”) in order to attach payments owed to the
telecommunications company. Estate of Heiser, 807 F. Supp. 2d
at 16–18. The plaintiffs chose not to sue under TRIA because of
the paucity of blocked Iranian assets available for attachment.
Id. at 15. They chose instead to sue under the FSIA because it
allows plaintiffs to attach the property of state agencies or
instrumentalities when they cannot attach the property of the
state itself. Id. at 15–16, 18. Since OFAC’s Iranian Transactions
Regulations contained a general license that “unblocked”
payments to telecommunication companies that handled traffic
between the United States and Iran, the plaintiffs attempted to
attach payments owed by Sprint to the Telecommunications
Company of Iran. Id. at 16–17. In a footnote, the district court
noted:
Here, the payments owed from Sprint to [sic]
TIC are neither seized nor frozen; instead, they
are made under a general license permitting
Nos. 13-3732 & 13-3738 45
payments incident to telecommunications traffic.
… Thus, because transactions between Sprint
and [sic] TIC are undertaken under an OFAC
licensing scheme, they are unblocked and not
subject to attachment.
Id. at 18 n.6. The Fifth Circuit misunderstood this discussion to
mean that the district court held that blocked assets subject to
a license (such as we have here) are unblocked. That is not
what the district court said. Rather, the district court explained
that the payments between the telecommunication companies
were never blocked because the OFAC general license re-
moved all such transactions from the sanction regulations’
prohibitions. Since the payments were never blocked to begin
with, TRIA was inapplicable.
This is why the distinction between general and specific
licenses is important. GTSR defines a general license as “any
license or authorization the terms of which are set forth in
subpart E of this part” and a specific license as “any license or
authorization not set forth in subpart E of this part but issued
pursuant to this part.”5 31 C.F.R. §594.307
. Subpart E of the GTSR contains regulations that authorize specific types of transactions. See, e.g.,31 C.F.R. § 594.517
(“receipts of payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to § 594.506(a) are authorized from funds originating outside the United States”). A general license, then, is not so much a license as a regulation preventing assets from being blocked in 5 Each part of the OFAC regulations contains its own definitions so it is necessary to examine the definitions specific to the sanction regime at issue. See31 C.F.R. § 501.301
.
46 Nos. 13-3732 & 13-3738
the first place. In contrast, a specific license is a license issued
under the authority of the regulations that is necessary to
unblock assets that the regulations have at first blocked. In this
case we are dealing with a specific license that unblocked the
funds for the purposes of forfeiture.
The second case relied upon by Holy Land made the same
distinction. In Bank of N.Y., the Second Circuit adopted the
reasons of the “fine opinion below” and stated:
[W]e hold that assets blocked pursuant to Execu-
tive Order 12170, 44 Fed. Reg. 65,729
(Nov. 14,
1979), and its accompanying regulations, see 31
C.F.R. Part 535, that are also subject to the gen-
eral license of 31 C.F.R. § 535.579
, are not blocked
assets under the TRIA and therefore are not
subject to attachment under that statute.
Bank of N.Y., 484 F.3d at 150
. Below, the district court ex- plained: “This license [31 C.F.R. § 535.579
(a)] has the effect of removing a prohibition or prohibitions in subpart B from the transaction. … Accordingly, transactions authorized by the general license would not be blocked by Section 535.201.” Bank of N.Y. v. Rubin,2006 U.S. Dist. LEXIS 10215
at *9 (S.D.N.Y. Mar. 15, 2006) (quotation omitted). The license at issue in Bank of N.Y. was not a specific license of the type at issue here or in Holy Land, but a regulation put in place to effectuate the “Algiers Accords” where “most Iranian assets in the United States were unblocked and the trade embargo was lifted.”Id. at *8
. Therefore, as with Estate of Heiser, Bank of N.Y. concerns a general license that is really a regulation that removes the prohibition from the law, not a specific license that unblocks assets for a specific purpose that were blocked by an OFAC order. Thus, it stands that assets subject to a general license are Nos. 13-3732 & 13-3738 47 not blocked for the purposes of TRIA because a general license is a regulation that removes the prohibition against the assets so that the sanction regulations do not block the assets in the first place. See Weinstein v. Islamic Republic of Iran,299 F. Supp. 2d 63
, 67–68 (E.D.N.Y. 2004). That is not the case here.
V. Conclusion.
For the reasons explained above, neither the forfeiture
license nor the arrest warrants in this case unblocked the funds
for the purpose of TRIA. Consequently, the funds are still
blocked and available to satisfy the insurance companies’
judgment. To hold otherwise would render meaningless our
opinion that TRIA’s “notwithstanding” clause supersedes civil
forfeiture standing requirements. We are compelled to hold
that TRIA supersedes civil forfeiture standing requirements
because “once the United States commences a forfeiture action,
it is impossible for qualified albeit unrelated victims of terror
(here, the insurance companies) to comply with civil forfei-
ture’s innocent owner requirement and, at the same time,
execute against the blocked funds.” Ante at 20. Yet, as the
government explains, “To secure the in rem jurisdiction, the
district court was required to arrest or judicially restrain the
defendant funds.” Gov’t Reply Br. 26 n.23 (citing United States
v. All Funds Distributed To Weiss, 345 F.3d 49
, 55 (2d Cir. 2003) (possession or restraint of the defendant res is necessary for the district court to secure its in rem jurisdiction.)).6 If an OFAC forfeiture license with an arrest warrant or restraining order unblocks blocked assets, plaintiffs who are “allowed to enter the courthouse” through TRIA’s “notwithstanding” clause will 6 An examination of Rule G(3)(b) of the Supplemental Rules of Admiralty or Maritime Claims and Asset Forfeiture also reveals this to be the case. 48 Nos. 13-3732 & 13-3738 never obtain relief since every forfeiture action against blocked funds requires an OFAC license and an arrest warrant or restraining order. Finally, since neither the license nor the arrest warrants unblock the funds under TRIA, it is necessary to address the government’s sovereign immunity argument. The government argues that the insurance companies cannot attach the funds because TRIA does not waive the government’s sovereign immunity. The district court, however, correctly found that Congress had waived the government’s sovereign immunity through TRIA. We should adopt the district court’s reasoning and reach the same conclusion. See United States v. All Funds on Deposit with R.J. O’Brien & Assocs.,892 F. Supp. 2d 1038
,
1043–45 (N.D. Ill. 2012).
All that said, perhaps what is most troubling about this case
is that the Executive Branch has dictated the pace of this
proceeding at every turn and continually stonewalled the
insurance companies’ efforts to satisfy their judgment against
terrorist assets. The funds were blocked by the government
from 2007 to 2011. After ignoring FOIA requests from the
insurance companies for years on the grounds that they were
exempt from disclosure for reasons of national security, the
government finally disclosed the identity of the blocked assets
when, in June 2011, the government initiated a forfeiture
proceeding against them.7 In August 2011, the insurance
7
In July 2003, the insurance companies sent FOIA requests to relevant
federal agencies including the Treasury Department and the DOJ seeking
“identification of assets belonging to” al-Qaeda and approximately 192
other Executive Order 13224 terrorist designees. In 2005, the insurance
companies brought suit to obtain this information. In October 2006,
Treasury asserted that information was exempt from disclosure. In June
Nos. 13-3732 & 13-3738 49
companies timely asserted their interests. The government
resisted, but lost in the district court. Now, on appeal, the
government argues that its acquisition of a forfeiture license
unblocked the assets, and because the assets are unblocked
they are no longer within the ambit of TRIA. Because the court
accepts this argument, the insurance companies are out of luck,
and the assets will be forfeited to the government without ever
seeing the light of day. The government accomplishes this coup
d’état despite the fact that the forfeiture license that is the
lynchpin of its theory is not in the record, so we do not have
the complete picture of its contents. Perhaps that is why the
government used the coup de main of stipulating to a vague
description of the unseen forfeiture license.
For these reasons, I would affirm the judgment of the
district court.
2008, the insurance companies submitted an amended FOIA request for
“any and all documents from the DOJ’s Criminal Division identifying assets
belonging to the foreign states, terrorism-related entities and
individuals … .” In October, 2008, the DOJ-Criminal Division responded
that “as of August 5, 2008, the AFMLS has reported that they do not have
any records of assets pertaining to the individuals and entities named in
your request.” In December 2008, the government prevailed in the FOIA
suit.