[00:00:00] Speaker 00:
Case number 17-7037.

[00:00:05] Speaker 00:
James Owens at L. Appellants versus BMP Paribas S.A.

[00:00:09] Speaker 00:
at L. Mr. Vale for the appellants.

[00:00:12] Speaker 00:
Mr. Friedman for the appellees.

[00:01:12] Speaker 03:
Morning.

[00:01:13] Speaker 03:
Morning, Your Honor.

[00:01:15] Speaker 03:
May it please the court.

[00:01:16] Speaker 03:
I am John Vail for the plaintiffs.

[00:01:21] Speaker 03:
I still looks like I just lost my notes.

[00:01:24] Speaker 03:
Excuse me, sir.

[00:01:55] Speaker 03:
Thank you, Rocky.

[00:01:57] Speaker 03:
May it please the court, John Vail, for the plaintiffs.

[00:02:00] Speaker 03:
The plaintiffs are all victims of the 1998 East Africa embassy bombings.

[00:02:06] Speaker 03:
They claim that BNP, the defendant, which pleaded guilty to conspiracy involving manipulating U.S.

[00:02:12] Speaker 03:
currency in violation of sanctions, is liable under the Anti-Terrorism Act for their injuries.

[00:02:19] Speaker 03:
District Court dismissed the plaintiff's complaint, finding that no claim exists under the ATA for aiding and abetting terrorism, and that plaintiffs had not adequately pleaded a causal connection between BNP's conduct and their injuries.

[00:02:35] Speaker 03:
I'll focus first on a couple of factual points to distinguish this case from other cases that are extant.

[00:02:42] Speaker 03:
The key to precedents are Boyle and Raustein.

[00:02:45] Speaker 03:
I don't think there's any secret about that.

[00:02:47] Speaker 03:
I don't think there's any disagreement about that.

[00:02:50] Speaker 03:
BNP admitted that it began manipulating currency transactions for Sudan in 1997.

[00:02:59] Speaker 04:
Manipulating?

[00:03:01] Speaker 03:
Yes.

[00:03:02] Speaker 04:
They admitted they manipulated currency.

[00:03:05] Speaker 04:
They admitted that they had a relationship, a banking relationship with Sudan.

[00:03:10] Speaker 04:
I don't recall them admitting that they were manipulating currency transactions.

[00:03:15] Speaker 03:
They admitted that in the months, quotation, in the months,

[00:03:21] Speaker 03:
After it began its relationship with Sudan, its people, its authorized people, turned a blind eye to ignoring sanctions and processing those sanctions for the benefit of Sudan.

[00:03:41] Speaker 04:
Oh, I missed that.

[00:03:42] Speaker 04:
Where is that in the record?

[00:03:44] Speaker 03:
That is at J-96.

[00:03:51] Speaker 03:
Why does that matter?

[00:03:53] Speaker 03:
One of the reasons it matters is that we know it establishes a state of mind, willingness to ignore U.S.

[00:04:06] Speaker 03:
law and violation of law in order to aid Sudan

[00:04:12] Speaker 03:
prior to the bombings.

[00:04:14] Speaker 03:
So there's a time period.

[00:04:16] Speaker 02:
You still haven't gotten there.

[00:04:17] Speaker 02:
In order to aid Sudan, that's not enough, right?

[00:04:19] Speaker 02:
No, I think it is enough.

[00:04:21] Speaker 02:
Rothstein tells us that there has to be more than just aiding a state-sponsored terrorism.

[00:04:27] Speaker 02:
There's got to be some nexus between that aid and the act of terror.

[00:04:35] Speaker 02:
And you haven't alleged that.

[00:04:36] Speaker 03:
I don't think, first of all, Rothstein

[00:04:42] Speaker 03:
We can go into different.

[00:04:43] Speaker 03:
The question of causality.

[00:04:47] Speaker 03:
There's a verbal formula of causality that I think is in play here, that I think people agree about.

[00:04:53] Speaker 03:
And that's that it's a substantial factor in a sequence of responsible causation.

[00:05:01] Speaker 03:
all right, and under the under general court law, which we knew Congress wanted to apply here, that kind of that kind of aid to Sudan, who has been this court recently affirmed that Sudan was responsible for the bombings.

[00:05:23] Speaker 03:
This court affirmed that last month.

[00:05:26] Speaker 02:
Got all that.

[00:05:27] Speaker 02:
What's the connection between what BNP did and those bombings?

[00:05:32] Speaker 02:
There's no question that BNP had a relationship with Sudan.

[00:05:36] Speaker 02:
But Rothstein, you're going to have to get out pretty much to Rothstein, if you can see by direction here.

[00:05:40] Speaker 02:
Rothstein tells us that's not enough.

[00:05:43] Speaker 02:
You have to allege some link between the financial transactions between BNP and Sudan and the bombing.

[00:05:53] Speaker 03:
That's the fungibility issue, Your Honor.

[00:05:55] Speaker 03:
And Rostein rejected fungibility in that case, and there are distinct grounds here.

[00:06:01] Speaker 03:
One of the reasons Rostein rejected liability there was it said Iran is this big, complex nation state.

[00:06:10] Speaker 03:
Sudan wasn't.

[00:06:12] Speaker 03:
Sudan was effectively a barely functioning state devoted to advancing terror with an economy... So we're supposed to undertake that sort of inquiry to look at a state and see the level of complexity involved?

[00:06:24] Speaker 02:
No, I don't think so.

[00:06:24] Speaker 02:
You're supposed to allege facts that tell us... We alleged... Excuse me.

[00:06:28] Speaker 02:
Yes.

[00:06:28] Speaker 02:
You're supposed to allege facts that tell us how we get from BNP having transactions with Sudan to the bombing, to the bombing.

[00:06:38] Speaker 02:
It's not enough to just say they were involved with Sudan.

[00:06:41] Speaker 03:
Well, Rothstein doesn't quite say that, Your Honor.

[00:06:44] Speaker 02:
It says, we reject a strict liability scheme on any bank that undertakes transactions with a nation as a state sponsor.

[00:06:54] Speaker 03:
It's not a strict liability scheme.

[00:06:56] Speaker 03:
It is a standard when you have joint actors causing a tort.

[00:07:02] Speaker 03:
This is a standard under the restatement.

[00:07:06] Speaker 03:
This is a standard form of causality.

[00:07:11] Speaker 03:
Boehm says that.

[00:07:12] Speaker 02:
Boehm talks about... Boehm is dealing with the terrorist organization.

[00:07:18] Speaker 02:
Rothstein is dealing with the state sponsor of terrorism.

[00:07:22] Speaker 02:
Congress tells us to treat the two differently, right?

[00:07:27] Speaker 03:
Well, under the ATA, the ATA

[00:07:31] Speaker 03:
They're not the same.

[00:07:32] Speaker 02:
The statutory scheme does not treat them as the same.

[00:07:35] Speaker 02:
I mean, the statutory scheme envisions that the State Department can give a bank a license to do business with the state sponsor of terrorism.

[00:07:43] Speaker 02:
That's true, but it didn't hear... No such latitude when it comes to terrorist organizations.

[00:07:49] Speaker 02:
And Boyne was about a terrorist organization.

[00:07:51] Speaker 03:
Well, roasting concedes, back to fungibility, your honor, roasting concedes that it's more likely that funds given to a state sponsor of terrorism will be used to sponsor terrorism than charitable donations.

[00:08:10] Speaker 03:
It is more likely enough that gets you past 12 or 6?

[00:08:15] Speaker 03:
Well, it's more likely, but the point there is, Rothstein is saying that there can be a factual inquiry about fungibility.

[00:08:26] Speaker 03:
We have pleaded, as a matter of fact,

[00:08:31] Speaker 03:
that these funds were fungible in that way and led to terrorism.

[00:08:37] Speaker 03:
We quoted expert testimony in the complaint on which Congress relied in passing the statute.

[00:08:48] Speaker 01:
In this case, fungibility is a matter of fact.

[00:08:51] Speaker 01:
What impact does the Supreme Court's analysis of the statute in

[00:08:56] Speaker 01:
or the material support statute in Holder v. Humanitarian Project, how does that impact or not your pleading requirements here?

[00:09:10] Speaker 03:
Well, I think Holder says that Holder gets a broader reading of fungibility than Rustine does.

[00:09:20] Speaker 03:
That's my response, Your Honor.

[00:09:22] Speaker 03:
And as I emphasize, we have pleaded this as a matter of fact.

[00:09:30] Speaker 03:
Sudan was much smaller, and we know Sudan was directly involved in the sponsorships of terrorism.

[00:09:42] Speaker 03:
What we don't know and what we have not pleaded

[00:09:48] Speaker 03:
The BNP identifies correctly.

[00:09:50] Speaker 03:
We have not pleaded that Transaction X on day Y that BNP illegally concluded on behalf of Sudan was directly given to Hamas, Hezbollah, and al-Qaeda in order to perform the bombings.

[00:10:14] Speaker 03:
But we don't know that.

[00:10:17] Speaker 03:
We couldn't know that.

[00:10:19] Speaker 03:
BNP hid that.

[00:10:21] Speaker 03:
That was part of its conspiracy.

[00:10:24] Speaker 03:
The conspiracy for which it is a convicted felon.

[00:10:28] Speaker 03:
Admittedly, not during these years, but we know that it pleaded guilty beginning in 2002.

[00:10:37] Speaker 03:
But we know that its activities started in 1997.

[00:10:42] Speaker 03:
Can we make a plausible inference?

[00:10:44] Speaker 03:
This is a pleading case.

[00:10:46] Speaker 03:
Can we make a plausible inference that Sudan was benefiting from those activities in 1997?

[00:10:51] Speaker 04:
Well, we don't know what the activities were.

[00:10:53] Speaker 04:
And you haven't alleged any particular transaction.

[00:10:58] Speaker 04:
For all we know, the banking relationship started, but there were no transactions in 1997 because there's no allegation that there were.

[00:11:08] Speaker 03:
Well, no, there's the allegation and the fact, the established fact, the unrebuttable fact.

[00:11:14] Speaker 03:
This is not a matter of assumption, as in the usual case.

[00:11:18] Speaker 03:
This is an established fact.

[00:11:23] Speaker 03:
that Sudan began processing transactions and ignoring the fact that they were illegal in 1997.

[00:11:40] Speaker 02:
Yes.

[00:11:40] Speaker 02:
Is that enough, though?

[00:11:41] Speaker 02:
That they were engaged in illegal conduct, does that get you to that they were involved in the terrorist bombing?

[00:11:51] Speaker 02:
Your response said it's fungibility, right?

[00:11:53] Speaker 03:
Right.

[00:11:53] Speaker 03:
Boyne made the analogy, if you give rocks to a person whom you know drops them off of bridges onto cars, he drops the rocks and kills someone, you are liable as an aider and a better.

[00:12:11] Speaker 03:
you are primarily viable under the restatement formulation.

[00:12:20] Speaker 03:
Boym says that, and that's the analogy here.

[00:12:23] Speaker 03:
Here, BNP gave money, not rocks, but it was money to buy rocks.

[00:12:30] Speaker 03:
Rocks were bought, rocks were dropped off of the bridge,

[00:12:35] Speaker 03:
and American citizens and brave Kenyan and Tanzanian U.S.

[00:12:39] Speaker 03:
nationals who were working at the embassy and defended the U.S.

[00:12:44] Speaker 03:
citizens in the embassy were injured and killed as a result.

[00:12:49] Speaker 03:
And they are legally responsible for that.

[00:12:53] Speaker 03:
And I'll reserve the remainder of my time for rebuttal.

[00:13:05] Speaker 05:
Good morning, Your Honors.

[00:13:05] Speaker 05:
Lawrence Friedman on behalf of BNPP.

[00:13:09] Speaker 05:
Your Honors have it absolutely right.

[00:13:11] Speaker 05:
The fatal defect with the complaint, as the District Court found, is that there are no non-conclusory allegations

[00:13:20] Speaker 05:
that take the facts to the next step.

[00:13:24] Speaker 05:
There's no question that BNPP processed financial transactions for Sudan.

[00:13:31] Speaker 05:
Mr. Vale conceded that that didn't begin until 2002, which is four years after the attacks.

[00:13:39] Speaker 05:
And I'll come back to that.

[00:13:40] Speaker 05:
So we have a problem with proximate causation right there.

[00:13:44] Speaker 05:
But as you, Judge Griffith, said, you have to take it to the next step.

[00:13:48] Speaker 05:
There are no well-pleaded allegations that Sudan then transferred funds that became available to it through BNPP to Al-Qaeda.

[00:13:59] Speaker 01:
What about paragraph 86 of the complaint, J-37?

[00:14:05] Speaker 01:
says, starting from at least 1997 up to and through August 7, 1998, the defendants became key to allowing Sudan to sell oil through the U.S.

[00:14:16] Speaker 01:
banking system, thereby allowing Sudan to raise money to buy arms and supplies for and otherwise support Hezbollah, al-Qaida, and other terrorist organizations.

[00:14:28] Speaker 05:
Judge Wilkins, there are two defects in that allegation.

[00:14:32] Speaker 05:
Number one is completely conclusory, and number two, it's completely inconsistent with what BMP actually pleaded to.

[00:14:39] Speaker 05:
I'd refer, Your Honor, to J.A.— What does that matter?

[00:14:43] Speaker 01:
Well, what it matters— Why do I care on a motion to dismiss what BMP pleaded to?

[00:14:49] Speaker 05:
Because, Your Honor, under Twombly and Iqbal, there need to be well-pleaded, nonconclusory allegations.

[00:14:55] Speaker 01:
What's conclusory about saying that they took money that they were able to access from your clients and bought arms and bombs with them?

[00:15:06] Speaker 01:
and gave them to Al Qaeda.

[00:15:08] Speaker 01:
What's conclusory about that?

[00:15:10] Speaker 05:
The complaint is based entirely on the June 1994 agreements that the MPP entered into with the Justice Department and with various regulatory authorities.

[00:15:20] Speaker 05:
There is nothing in those June 2000

[00:15:24] Speaker 05:
those June 2004 agreements, 2014 agreements that supports the notion that, first of all, anything was done by BNPP to open accounts before 2002, and there's nothing to support the notion that anything was given to Al-Qaeda.

[00:15:40] Speaker 01:
So you're wanting us to decide the motion for a summary judgment here or a 12b6 motion?

[00:15:46] Speaker 05:
a 12b6 motion, Your Honor.

[00:15:47] Speaker 05:
And under Iqbal, it is the obligation of the plaintiffs to make nonconclusory allegations supported by concrete fact and not just throw a feather in the air and say, well, that money was given to al-Qaeda.

[00:16:02] Speaker 01:
Well, I went back and read Iqbal and Twombly this morning just to make sure I understood what they said.

[00:16:09] Speaker 01:
And when they use the words conclusory, they're talking about using words like you provided material support.

[00:16:20] Speaker 01:
So in other words, just stating the elements of the claim as stated in the statute.

[00:16:27] Speaker 01:
Those are conclusory allegations.

[00:16:29] Speaker 01:
Facts are something else.

[00:16:32] Speaker 01:
Facts are saying like you provided support by buying arms or giving them money.

[00:16:39] Speaker 01:
That's not a conclusory allegation.

[00:16:41] Speaker 01:
That's a fact.

[00:16:42] Speaker 05:
But you can't get past Rule 12b6 motion by saying something like that for which there's no factual support provided.

[00:16:51] Speaker 05:
It's just a conclusion.

[00:16:52] Speaker 01:
What Iqbal and Twombly say is... So Iqbal and Twombly say that you have to cite where your evidence is going to come from?

[00:16:59] Speaker 05:
It's saying that you have to give a factual allegation that would support the claim that can't just be made up out of whole cloth.

[00:17:10] Speaker 05:
How is this made up out of whole cloth?

[00:17:13] Speaker 05:
Because there's nothing in the June 2014 agreements, which is the only evidentiary basis that the complaint cites,

[00:17:20] Speaker 05:
that refers to any money having been given to al-Qaeda at all.

[00:17:24] Speaker 01:
So complaints have to cite what their evidentiary basis is for their support.

[00:17:30] Speaker 01:
Iqbal and Twombly say that somewhere.

[00:17:32] Speaker 05:
Judge Wilkins, I believe Iqbal and Twombly stand for the proposition that you can't just make up a factual allegation out of whole cloth.

[00:17:39] Speaker 05:
It has to be concrete, and it has to be grounded in a factual assertion and support.

[00:17:45] Speaker 05:
And here,

[00:17:46] Speaker 05:
It is not only made up out of whole cloth, but the complaint purports to be based on the June 2014 agreements.

[00:17:53] Speaker 05:
And recall, BNPP was not accused of any terrorism violations.

[00:17:58] Speaker 05:
The Justice Department and the Department of Financial Services in New York and the other regulators to whom, to which BNPP pleaded guilty didn't find anything about, and didn't allege anything, and BNPP did not admit to anything about the money's

[00:18:14] Speaker 05:
What happened with the monies that were made available to Sudan?

[00:18:19] Speaker 01:
I'm not understanding what that has anything to do with how we evaluate a 12b6 motion.

[00:18:27] Speaker 05:
What it has to do with how you evaluate a 12b6 motion is that Iqbal and Twombly say that you must provide non-conclusory factual allegations with a concrete underpinning.

[00:18:41] Speaker 05:
and what your honor read from the complaint.

[00:18:44] Speaker 05:
There's no concrete factual underpinning for that.

[00:18:47] Speaker 05:
A plaintiff cannot simply come into court and say, I believe pigs can fly, and I have a claim based on that.

[00:18:54] Speaker 01:
You have to base it on something factual.

[00:18:55] Speaker 01:
Well, I understand that, but we're far from that.

[00:18:58] Speaker 01:
We've got a country that's a designated state sponsor of terrorism.

[00:19:03] Speaker 01:
So how is it some sort of a leap in logic to say that they would sponsor and support terrorists by giving them money or arms, as opposed to just giving them safe refuge?

[00:19:18] Speaker 01:
How is that some sort of a leap that's implausible?

[00:19:22] Speaker 05:
Yes, it is a leap that is implausible, and I'll give you several reasons why.

[00:19:25] Speaker 05:
First of all,

[00:19:26] Speaker 05:
All that BMP pleaded guilty to is a conspiracy that spanned from 2002 to 2007.

[00:19:32] Speaker 01:
Why does what BMP pleaded guilty to have anything to do with this?

[00:19:37] Speaker 05:
Because the plaintiffs have made the election to base their allegations on the June 2014 agreements.

[00:19:43] Speaker 05:
They haven't come up with any other facts.

[00:19:44] Speaker 05:
They haven't made any factual assertions independent of what is in the June 2014 agreements.

[00:19:49] Speaker 04:
I just read one from paragraph 86.

[00:19:50] Speaker 04:
What is the statute of limitations on the

[00:19:54] Speaker 04:
offences to which BNP admitted?

[00:19:59] Speaker 05:
I don't know, Your Honor, but it's under seven years.

[00:20:04] Speaker 05:
It's what?

[00:20:04] Speaker 05:
It's under seven years.

[00:20:05] Speaker 05:
There was no statute of limitations defense that BNP asserted in response to the allegations that were made against it.

[00:20:13] Speaker 04:
You say they didn't go back beyond 2002, but that may be because the statute of limitations would have prevented any kind of conviction for an offense prior to 2002.

[00:20:24] Speaker 05:
I don't think so, Your Honor.

[00:20:26] Speaker 05:
The statute of limitations would have been longer than that.

[00:20:29] Speaker 05:
I can't cite chapter and verse, but I believe that's the case.

[00:20:33] Speaker 05:
But even if you didn't have the fact that the transactions

[00:20:38] Speaker 05:
began four years after these attacks.

[00:20:40] Speaker 05:
I come back to Judge Griffith's point.

[00:20:43] Speaker 05:
Rothstein teaches that in order to go from what BNP admitted to, which is being engaging in transactions with a state sponsor of terrorism, in order to go from that to a private right of action,

[00:21:00] Speaker 05:
by a victim of a terrorist act, you need to satisfy the by reason of proximate causation requirement.

[00:21:08] Speaker 02:
Congress is very deliberate.

[00:21:10] Speaker 02:
Look, proximate causation, the fundamental principle, as we all learn in torts, right, is foreseeability.

[00:21:17] Speaker 02:
And that's the guts of it, right?

[00:21:20] Speaker 05:
Not quite, Your Honor.

[00:21:21] Speaker 05:
The Supreme Court, in the Holmes case, in the Anza case, in the Hemi Group case, said that the words, by reason of, have a very specific meaning.

[00:21:30] Speaker 05:
They were imported into the Anti-Terrorism Act from the RICO statute and from the antitrust laws.

[00:21:36] Speaker 05:
And they need more than foreseeability.

[00:21:38] Speaker 05:
They mean proximate but for cause.

[00:21:42] Speaker 05:
It means that the act at issue was a substantial factor in causing the event to occur, and it was a but for cause, and it was the proximate cause.

[00:21:53] Speaker 05:
With respect, Your Honor, the foreseeability standard is a lower standard

[00:21:57] Speaker 05:
of causal link, and the courts have been clear, the Supreme Court in particular, that by reason of causation is a very deliberate and very straight look.

[00:22:10] Speaker 02:
There's nothing about being a federal judge that precludes one from exercising common sense, right?

[00:22:16] Speaker 02:
And doesn't common sense tell you?

[00:22:18] Speaker 02:
that if you are dealing with a state such as Sudan, which, as your friend points out, is a lot different than Iran, right?

[00:22:27] Speaker 02:
That if you're dealing with a state such as Sudan, that you're dealing with something that's a whole lot more like a terrorist organization than anything else.

[00:22:36] Speaker 02:
And if you're funding, if you're helping them to fund their activities, look, their primary activities are state-sponsored terrorism.

[00:22:44] Speaker 02:
Why would someone not be on notice

[00:22:48] Speaker 02:
that if they're dealing with somebody like Sudan, that they're helping terrorism.

[00:22:55] Speaker 05:
for two reasons, Your Honor, at the outset.

[00:22:57] Speaker 05:
First of all, again, the only concrete factual allegations are that the provision of funds to Sudan started four years after these attacks occurred.

[00:23:09] Speaker 05:
And therefore, those transactions entered into by BNPP cannot be the proximate cause of these attacks.

[00:23:16] Speaker 05:
They started four years after the attacks occurred.

[00:23:18] Speaker 01:
So we just ignored paragraph 86 in the complaint.

[00:23:21] Speaker 01:
What are we supposed to do with paragraph 86 in the complaint?

[00:23:25] Speaker 05:
Under Iqbal and Twombly, Your Honor, you credit the well-pleaded allegations of the complaint and then determine whether the claims are plausible.

[00:23:33] Speaker 05:
That is not a well-pleaded allegation of the complaint because it's made up out of thin air.

[00:23:38] Speaker 05:
There is nothing cited to support it, and indeed it is counterfactual in relation to the June 2014 agreement.

[00:23:46] Speaker 01:
Okay, what about all the language in Iqbal and Twombly saying that we're standing by all of our cases, that judges don't decide the facts,

[00:23:53] Speaker 01:
and it might be even, you know, I'm trying to remember exactly how the court put it, but far fetched or the judge may have serious doubts about whether the plaintiff is going to be able to prove his or her well pleaded allegations.

[00:24:08] Speaker 01:
But that doesn't matter at the 12 B six stage.

[00:24:11] Speaker 05:
I agree with that entirely, Your Honor, but these are not well-pleaded allegations.

[00:24:14] Speaker 05:
There are no concrete facts that are cited to support it.

[00:24:19] Speaker 01:
So if they had pleaded that Sudan gave al-Qaeda $10 million in 1997, just months or early 1998, just months prior to this attack,

[00:24:35] Speaker 01:
And they just said that.

[00:24:37] Speaker 01:
You're saying that that wouldn't be a well-pleaded allegation?

[00:24:41] Speaker 05:
They need to cite something that supports it here.

[00:24:45] Speaker 05:
They elected.

[00:24:46] Speaker 05:
They elected to support.

[00:24:48] Speaker 01:
So Iqbal and Twombly requires that they cite in the complaint

[00:24:53] Speaker 01:
like, see whatever the source is for it?

[00:24:56] Speaker 05:
It requires that the allegation be stated in a way that is not conclusory.

[00:25:03] Speaker 05:
I'm sorry, Your Honor, but just to say that that happened is a conclusory allegation.

[00:25:08] Speaker 05:
And Iqbal and Twombly teach that when you're applying rule 12b6... What's a non-conclusory allegation?

[00:25:13] Speaker 01:
Give me an example.

[00:25:13] Speaker 05:
A non-conclusory allegation would be BNPP admitting to having given funds that were then provided to Al-Qaeda.

[00:25:22] Speaker 05:
There's nothing here to suggest that funds were given to Al-Qaeda.

[00:25:26] Speaker 05:
And if I may come back to Judge Griffith's question, Your Honor, my friends have it exactly backwards.

[00:25:32] Speaker 05:
Sudan was not worse than Iran.

[00:25:36] Speaker 05:
If one looks, and I can provide the court with citations to this, the plaintiffs made this argument in their reply brief for the first time that Rothstein is distinguishable because Sudan is worse than Iran.

[00:25:47] Speaker 05:
It's just counterfactual.

[00:25:49] Speaker 05:
It's fundamentally not true.

[00:25:50] Speaker 05:
If one looks at the State Department reports, it's called Patterns of Global Terrorism, and we're to look at what the State Department said from 1993 onward,

[00:25:59] Speaker 05:
Iran is always cited as the most active state sponsor of terrorism.

[00:26:04] Speaker 05:
Number two, this court ruled, as my friend said just last month or the month before, in Owens v. Sudan, that there is no evidence whatsoever that Sudan provided funding to al-Qaeda.

[00:26:19] Speaker 05:
To the contrary, this court affirmed Judge Bates's conclusion that all that Sudan gave to al-Qaeda was safe harbor,

[00:26:28] Speaker 05:
and logistical support.

[00:26:30] Speaker 05:
In fact, Judge Bates in the Owens against Sudan case found that al-Qaeda actually funded Sudan because Sudan had no money.

[00:26:41] Speaker 05:
So I can provide sites to the State Department reports if Your Honor wishes, but this notion that Sudan is somehow worse than

[00:26:47] Speaker 05:
than it was worse than Iran is completely counterfactual.

[00:26:52] Speaker 02:
Can I go back, and maybe I'm asking you to repeat yourself.

[00:26:54] Speaker 02:
Can I go back to Judge Wilkins' question?

[00:26:57] Speaker 02:
Let's look at paragraph 86 and tell me again, what's deficient about this?

[00:27:02] Speaker 02:
Your argument is that this allegation is not sufficient to withstand a motion to dismiss under 12b6.

[00:27:12] Speaker 02:
Why?

[00:27:13] Speaker 05:
The reason why is as follows.

[00:27:15] Speaker 05:
The complaint is based on the June 2014 agreement.

[00:27:21] Speaker 02:
And this is inconsistent with that.

[00:27:22] Speaker 05:
And that is inconsistent with that.

[00:27:23] Speaker 02:
If the complaint were not based on the 2014 agreement.

[00:27:27] Speaker 05:
If they had something else, I'm sorry, Your Honor, if they had something else that they based it on, then it would not be clear that that is made up of whole cloth.

[00:27:36] Speaker 02:
What do you mean something else they based?

[00:27:38] Speaker 02:
Let's imagine they don't base it on the 2014 agreement.

[00:27:43] Speaker 02:
On information and belief, they plead what they say in paragraph 86.

[00:27:48] Speaker 02:
Is it deficient in that case?

[00:27:52] Speaker 02:
It is not a well-pleaded allegation.

[00:27:54] Speaker 02:
Why not?

[00:27:54] Speaker 02:
What are the words that are lacking?

[00:27:56] Speaker 05:
In the context here, I invite Your Honor to look at JA95.

[00:27:59] Speaker 05:
which is the crucial paragraph of the statement of facts of the guilty plea to the Justice Department, which says that the conspiracy that BNPP engaged in with Sudanese banks was from 2002 up through and including 2007.

[00:28:18] Speaker 05:
Your Honor, a plaintiff cannot

[00:28:21] Speaker 05:
have its Keikinida, too.

[00:28:22] Speaker 01:
It cannot rely on these guilty pleas and these consent orders as the basis for... And Baldwin Twombly said that they weren't eliminating, you know, alternative pleading.

[00:28:35] Speaker 05:
I don't think that's what Baldwin Twombly meant, that you can predicate a claim based on a guilty plea and then make a factual allegation that is completely contrary to that guilty plea.

[00:28:45] Speaker 05:
You can't have it both ways.

[00:28:48] Speaker 05:
So you cannot come into court

[00:28:50] Speaker 05:
and say, I am basing my allegations on the guilty pleas that BNPP entered into.

[00:28:56] Speaker 01:
Because there's some principle in law that says that a guilty plea is conclusive evidence of everything that happened that went wrong as opposed to a compromise?

[00:29:07] Speaker 05:
Absolutely not, Your Honor, but that is what the plaintiffs chose to base their complaint on.

[00:29:12] Speaker 05:
Yet they're making allegations that are completely counterfactual to that, and they have no basis for it whatsoever.

[00:29:18] Speaker 05:
You cannot

[00:29:19] Speaker 02:
So if they come back and amend their complaint and strike the reference to the plea agreement, then we've got a case?

[00:29:29] Speaker 05:
No, you don't have a case, Your Honor, because you still don't have by reason of causation.

[00:29:34] Speaker 05:
In order to have by reason of causation, as you, Judge Griffith, said when you were speaking with Mr. Vail, in order to have by reason of causation, you have to establish a direct relationship between the defendant's conduct

[00:29:46] Speaker 05:
and hear the terrorist attack at issue.

[00:29:51] Speaker 05:
And while, as you said before, Judge Griffith, in questioning Mr. Vale, while BNPP pleaded guilty to providing funds to Sudan, processing transactions to Sudan from 2002 to 2007, A, parenthetically, that's four years after the attack, so it couldn't approximately cause the attacks, but more importantly, as Your Honor indicated,

[00:30:13] Speaker 05:
There is nothing here to show that the funds were provided to Al-Qaeda.

[00:30:18] Speaker 05:
And to the contrary, this court, with these same plaintiffs, this court concluded, and Judge Bates concluded before it, that there is no evidence, no evidence, that Sudan ever provided any funds to Al-Qaeda.

[00:30:30] Speaker 05:
To the contrary, the evidence is that Al-Qaeda, given its riches at the time, provided funding to Sudan.

[00:30:37] Speaker 05:
If I could just go back to two or three points, Your Honor, that Mr. Vale said.

[00:30:42] Speaker 05:
First of all, Judge Randolph, you're absolutely right.

[00:30:45] Speaker 05:
There's no allegation of currency manipulation.

[00:30:48] Speaker 05:
There are allegations of

[00:30:49] Speaker 05:
clearing US dollar transactions for Sudanese banks.

[00:30:55] Speaker 05:
I still don't know why plaintiffs referred to that.

[00:30:58] Speaker 05:
Second of all, this case is not governed by general tort law.

[00:31:02] Speaker 05:
It is governed by the by reason of standard.

[00:31:04] Speaker 05:
And the by reason of standard requires that there be a direct relationship between the conduct of the defendant and, here, the terrorist attack.

[00:31:14] Speaker 05:
And by plaintiffs' own characterization,

[00:31:16] Speaker 05:
They are alleging an indirect relationship, because they're saying that BNPP provided financial services to Sudan, but they don't have the second stage of the equation.

[00:31:26] Speaker 05:
They don't have any evidence that monies were provided by Sudan to al-Qaeda.

[00:31:32] Speaker 05:
To the contrary, this court held to the opposite.

[00:31:36] Speaker 05:
This is not about fungibility.

[00:31:38] Speaker 05:
Fungibility has only been applied when direct aid is given to a designated foreign terrorist organization.

[00:31:44] Speaker 01:
So let's suppose there is another case, not this case, where it is alleged that this state passed $1 of every $100 that it took in to a foreign terrorist organization.

[00:32:06] Speaker 01:
and a company knew that and did business with that state.

[00:32:12] Speaker 01:
Nonetheless, have they stated the claim under the 88?

[00:32:16] Speaker 05:
not under the by reason of standard because the by reason of standard as applied by the Second Circuit in Rothstein basing it on how by reason of standard has been applied in antitrust and RICO cases would require showing that that money was provided to the terrorist organization and that it was used in the attack.

[00:32:37] Speaker 05:
Congress was very deliberate as the Rothstein court ruled.

[00:32:40] Speaker 01:
But that's not the way that the Supreme Court

[00:32:45] Speaker 01:
interprets how material support works.

[00:32:50] Speaker 01:
For instance, in Holder v. Humanitarian Law Project, right?

[00:32:53] Speaker 05:
Holder involves a designated foreign terrorist organization, and it involves direct support.

[00:32:58] Speaker 05:
Holder is not a material support case.

[00:33:00] Speaker 05:
Holder is a direct support case.

[00:33:02] Speaker 05:
Same is true of Boyne and the same is true of many of the other cases, Kilburn and others, that the plaintiffs rely on.

[00:33:09] Speaker 01:
So you're telling me that if someone donates

[00:33:15] Speaker 01:
$100 to a charity, and the charity says that we're going to pass $1, 1% of every dollar that we get to Al Qaeda, but that person hasn't violated the material support statute.

[00:33:32] Speaker 05:
that would state a claim, Your Honor, and I'm litigating this exact issue in the Second Circuit now, but under Rothstein, the plaintiff would be required to show that the funds that the defendant provided were in fact made available to the terrorist organization and were used in the attack.

[00:33:53] Speaker 05:
The courts

[00:33:55] Speaker 05:
every court to address this issue of indirect support for terrorism by providing aid to a state sponsor of terrorism.

[00:34:06] Speaker 05:
Every court, it's Rothstein, it's Al-Raji, it's district courts, every single court has ruled that by virtue of the by reason of standard, which Congress chose very deliberately, not strict liability, there's that passage in Rothstein that Judge Bates cited saying that

[00:34:23] Speaker 05:
There is no strict liability for providing funds to a state sponsor of terrorism.

[00:34:29] Speaker 05:
Rather, if Congress wanted there to be strict liability, it would not have chosen the by reason of standard.

[00:34:35] Speaker 05:
The by reason of standard requires something more.

[00:34:37] Speaker 05:
So Judge Wilkins, every court to address this issue has said that if you want to make an Anti-Terrorism Act claim for material support

[00:34:47] Speaker 05:
that is premised on indirect funding of terrorism, and here it's undisputed this is an indirect funding case, you need to show that A, the funds were provided by the direct recipient to the terrorist organization, and B, that the funds were actually used in the attack.

[00:35:04] Speaker 05:
That's common sense.

[00:35:05] Speaker 01:
That's by reason of causation.

[00:35:07] Speaker 01:
Okay, so let's take your argument to its logical conclusion here.

[00:35:13] Speaker 01:
So suppose someone gives $100 directly to Al-Qaeda.

[00:35:22] Speaker 01:
And that's what's pled.

[00:35:23] Speaker 01:
And then Al-Qaeda later bombs the embassy.

[00:35:27] Speaker 05:
That's material support.

[00:35:29] Speaker 01:
But how do we know that that $100 was used for the bombing?

[00:35:34] Speaker 05:
You can try to do that through discovery, but at least you have the threshold allegation of doing so.

[00:35:39] Speaker 02:
Why isn't that exactly the situation of the plaintiffs here?

[00:35:43] Speaker 02:
How are they supposed to know with the specificity that you're requiring?

[00:35:47] Speaker 02:
How are they supposed to know before discovery?

[00:35:49] Speaker 05:
I can tell you, Your Honor, how they're supposed to do it.

[00:35:52] Speaker 05:
First of all, these plaintiffs already have a claim that they have asserted.

[00:35:56] Speaker 05:
They have prevailed and won a $10.2 billion judgment against Sudan.

[00:36:02] Speaker 05:
Sudan is alleged to be the direct supporter through providing safe harbor and through logistical support.

[00:36:11] Speaker 05:
So they have already done that.

[00:36:13] Speaker 05:
They have satisfied this court and Judge Bates prior to this court that they have made a material support claim against Iran as the direct supporter of al-Qaeda.

[00:36:24] Speaker 05:
Second of all, what the plaintiffs could do is look for factual support

[00:36:29] Speaker 05:
in the investigative record and the criminal record.

[00:36:33] Speaker 05:
The difficulty they encounter here is that there is no such support because there is no evidence in that record of anything having been done for Sudan, let alone having been done for Al-Qaeda.

[00:36:45] Speaker 05:
before 2002, which is four years after the attack, which suggests to me, Your Honor, that there's no claim to be made against BNPP.

[00:36:54] Speaker 05:
Rather than to say they should get discovery to see if they could find something more, they chose to predicate their claims on the investigative and criminal record.

[00:37:03] Speaker 05:
And the investigative and criminal record doesn't support their claims.

[00:37:06] Speaker 05:
That tells me not that they should be able to burden us and the court

[00:37:10] Speaker 05:
with a lawsuit that is not based on well-plated allegations, but rather they have no claim to be made.

[00:37:15] Speaker 05:
And remember, the prosecuting assistant U.S.

[00:37:17] Speaker 05:
attorney at the sentencing of BNPP said that the victims of the embassy attacks have no claim against BNPP.

[00:37:25] Speaker 05:
They can't prove

[00:37:27] Speaker 05:
that BNPP had anything to do with these attacks.

[00:37:31] Speaker 05:
So that's not suggestive of a compromise.

[00:37:33] Speaker 05:
That's not suggestive of a statute of limitations issue.

[00:37:37] Speaker 05:
The government has said that BNPP is not liable to the victims of the horrible embassy attacks.

[00:37:45] Speaker 01:
And prosecuting their claims against Sudan, did the plaintiffs have to establish that the support that Sudan gave al-Qaeda

[00:37:57] Speaker 01:
actually led to the bombing.

[00:38:01] Speaker 05:
It was done on the basis of a default, Your Honor, number one.

[00:38:06] Speaker 05:
So I don't know exactly what evidence is, but to answer your question directly, under Rothstein, they do not need to show that because it's a case of direct support.

[00:38:15] Speaker 05:
We have to, under the ATA material support jurisprudence, distinguish between allegations of direct support and allegations of indirect support.

[00:38:23] Speaker 05:
And as Judge Griffith alluded to when he was speaking with my friend,

[00:38:28] Speaker 05:
Rothstein stands for the proposition that showing the first stage of funding a state sponsor of terrorism is not enough.

[00:38:35] Speaker 05:
You're not responsible for everything that the state may do with the funds that you provide.

[00:38:41] Speaker 01:
But here's what I'm trying to get at.

[00:38:44] Speaker 01:
So let's suppose Sudan says

[00:38:56] Speaker 01:
for every dollar that you give us, a dime is going to Al Qaeda, and knowing that you give a dollar to Sudan, is that indirect support of Al Qaeda, or is it that direct support?

[00:39:13] Speaker 05:
It is indirect support, but you have satisfied Rothstein by establishing, based on Sudan's own words,

[00:39:22] Speaker 05:
that the money you give to Sudan will be given to the terrorist organization.

[00:39:27] Speaker 05:
That's completely different from this case.

[00:39:29] Speaker 01:
But you haven't satisfied the other part of what you said Rosting requires, which is that that money was used to fund or contribute to the bombing.

[00:39:39] Speaker 05:
But, Your Honor, if you can make a well pleaded allegation based on Sudan's own statement,

[00:39:45] Speaker 05:
that they are going to give a percentage of whatever funds you provide them to al Qaeda.

[00:39:52] Speaker 05:
Uh, I would suspect that you have a plausible basis for going forward with your lawsuit.

[00:40:01] Speaker 05:
In contrast to this case, in contrast to this case, what's the legal principle that you're

[00:40:07] Speaker 01:
that you're using to say that you don't have to show that the dollars went towards the bombing in one instance, but not in another.

[00:40:16] Speaker 05:
Because, Your Honor, under the by reason of proximate causation standard, which requires an allegation of but for causation, it is an absolute threshold requirement

[00:40:27] Speaker 05:
to say to be able to allege on a well pleaded basis that the monies that were provided to Sudan were in turn provided to Al Qaeda.

[00:40:37] Speaker 05:
And this court has already ruled with these same plaintiffs presenting the evidence that there is no evidence that the monies went to Al Qaeda.

[00:40:45] Speaker 05:
That is the principle of law.

[00:40:46] Speaker 01:
by reason of causation based on a case where there was a default judgment.

[00:40:50] Speaker 05:
No, based on Rothstein and based on Al Raji Rothstein and Al Raji, which courts around the country are following and I urge this court to follow as well, provide that a case of indirect support is

[00:41:03] Speaker 05:
different from a case of direct support.

[00:41:05] Speaker 05:
And the reason for that is that Congress deliberately chose to use the by reason of standard.

[00:41:12] Speaker 05:
And the by reason of standard requires but for causation.

[00:41:16] Speaker 05:
And going back to Judge Griffith's colloquy with Mr. Vail, it is just, to me, a matter of simple common sense.

[00:41:24] Speaker 05:
that, OK, you have gotten to second base by alleging that BNPP provided funds to Sudan, but you can't get all the way home under Rothstein and al-Raji without presenting well-pleaded allegations that funds were provided, any funds were provided, let alone the funds that BNPP made available, that any funds were provided to Sudan.

[00:41:47] Speaker 05:
And there is nothing

[00:41:49] Speaker 05:
in the record.

[00:41:50] Speaker 05:
But more importantly, to your point, Judge Wilkins, nothing in the complaint that is a well pleaded allegation that any funds were provided to Sudan.

[00:41:58] Speaker 05:
To the contrary, this court ruled and Judge Bates ruled before it that there is no evidence whatsoever that Sudan provided any funds to al Qaeda.

[00:42:08] Speaker 05:
To the contrary, the evidence is that al Qaeda

[00:42:11] Speaker 05:
given its riches at the time, provided funds to sit down.

[00:42:14] Speaker 04:
Mr. Friedman, before you sit down, I want to ask you a series of questions.

[00:42:17] Speaker 04:
And then, Mr. Vail, I'd like you to respond to Mr. Friedman's responses to me.

[00:42:25] Speaker 04:
And the first question is, does the complain allege that BNP was a participant in the terrorist attacks?

[00:42:33] Speaker 04:
No.

[00:42:34] Speaker 04:
Does the complaint allege that BNP provided money to al Qaeda?

[00:42:40] Speaker 04:
No.

[00:42:41] Speaker 04:
Does it allege that U.S.

[00:42:42] Speaker 04:
currency, the U.S.

[00:42:44] Speaker 04:
currency that BNP transferred to Sudan was given to al Qaeda?

[00:42:49] Speaker 04:
No.

[00:42:49] Speaker 04:
Does the complaint allege that if BNP had not transferred U.S.

[00:42:54] Speaker 04:
currency to Sudan, that Sudan would not have funded the attacks?

[00:43:00] Speaker 04:
No.

[00:43:00] Speaker 04:
Which injured the plaintiffs?

[00:43:01] Speaker 05:
No, it does not allege that at all, Your Honor, and it's on all fours with Rothstein, because those same factors are the factors that the Second Circuit cited with respect to UBS.

[00:43:13] Speaker 05:
And none, none of those allegations are in this complaint.

[00:43:17] Speaker 04:
In the complaint, okay.

[00:43:18] Speaker 04:
Fine, thanks.

[00:43:20] Speaker 05:
Your Honor, Judge Griffith, may I just make one final point?

[00:43:23] Speaker 05:
Your Honor referred to the fact that how can they find these things out without discovery.

[00:43:28] Speaker 05:
And I've frankly given that some thought.

[00:43:31] Speaker 05:
This court has never accepted the notion that a case should be permitted to proceed in the absence of ICBAL compliant claims merely to allow a plaintiff to obtain discovery

[00:43:45] Speaker 05:
that might help that plaintiff to state a claim later on.

[00:43:48] Speaker 05:
That is a bootstrap.

[00:43:50] Speaker 05:
That would read Iqbal out of the books.

[00:43:51] Speaker 05:
It would read Rule 12b6 out of the books.

[00:43:55] Speaker 05:
But most importantly, it would change the Anti-Terrorism Act, again, for the last time.

[00:44:01] Speaker 05:
Congress deliberately chose that by reason of standard, knowing that it had been previously construed by the Supreme Court to require but for causation.

[00:44:12] Speaker 05:
And here, the complaint does not allege any but for causation because it doesn't allege any of the things that Judge Randolph cited.

[00:44:21] Speaker 05:
Thank you very much, Your Honors.

[00:44:22] Speaker 05:
I appreciate your indulgence.

[00:44:27] Speaker 02:
How much time did Mr. Vail have?

[00:44:30] Speaker 02:
And I think you ought to begin with Judge Randolph's questions.

[00:44:34] Speaker 03:
Judge Randolph, if you could repeat your questions.

[00:44:36] Speaker 03:
I couldn't get them quickly enough.

[00:44:39] Speaker 04:
Does the complaint allege that BNP was a participant in the terrorist attacks?

[00:44:44] Speaker 04:
No.

[00:44:45] Speaker 04:
Does the complaint allege that BNP provided money to al-Qaeda?

[00:44:50] Speaker 03:
Yes.

[00:44:51] Speaker 03:
It does?

[00:44:52] Speaker 03:
Where?

[00:44:53] Speaker 03:
It alleges that it gave money to Sudan.

[00:44:56] Speaker 03:
No, no, that's not my question.

[00:44:58] Speaker 03:
Directly?

[00:44:59] Speaker 04:
Yes.

[00:45:00] Speaker 04:
No.

[00:45:00] Speaker 04:
No.

[00:45:00] Speaker 04:
Does it allege that US currency that BNP transferred to Sudan was given?

[00:45:06] Speaker 04:
to Al Qaeda?

[00:45:07] Speaker 03:
Yes.

[00:45:08] Speaker 04:
Does it allege that if BNP had not transferred U.S.

[00:45:12] Speaker 04:
currency to Sudan, the attacks would not have occurred?

[00:45:20] Speaker 03:
Yes, it does.

[00:45:21] Speaker 03:
Where does it allege that?

[00:45:23] Speaker 03:
I don't have the complaint.

[00:45:26] Speaker 02:
I don't have it in mind.

[00:45:27] Speaker 02:
It definitely does allege that the attacks... You don't have the complaint?

[00:45:32] Speaker 02:
Are you here on a case?

[00:45:35] Speaker 03:
I have it with me, but I can't remember the paragraph number.

[00:45:39] Speaker 02:
It's about a critical allegation.

[00:45:40] Speaker 02:
This case is all about the complaint, Mr. Vail.

[00:45:53] Speaker 04:
You remember the question?

[00:45:55] Speaker 03:
Yes, I do remember the question.

[00:45:56] Speaker 03:
It alleges that the acts would not

[00:46:01] Speaker 04:
uh, but for, uh, B and P have not transferred U. S. Currency to Sudan.

[00:46:09] Speaker 03:
Yeah.

[00:47:15] Speaker 03:
I think paragraphs 14 through 19, 14 through 20 read together.

[00:47:20] Speaker 03:
We'll assert that allegation.

[00:47:24] Speaker 03:
They said BMP did this, others didn't.

[00:47:27] Speaker 03:
14 through 20, 14 through 18.

[00:47:38] Speaker 03:
But there is a specific paragraph asserting that the

[00:47:44] Speaker 04:
I don't see it in 14.

[00:47:47] Speaker 03:
Asserting that the.

[00:47:55] Speaker 03:
That they would not have occurred before the result to buff for this funding.

[00:48:03] Speaker 02:
Paragraph 12 perhaps.

[00:48:12] Speaker 03:
The direct connection to the attacks is paragraph one ten.

[00:48:31] Speaker 04:
I'll take a look at that.

[00:48:35] Speaker 03:
All right.

[00:48:36] Speaker 03:
Your honor, if I may come back to a couple other questions.

[00:48:38] Speaker 03:
BNP was convicted of conspiracy to violate trading with the Enemy Act.

[00:48:45] Speaker 03:
Mr. Friedman made the assertion that there was no direct aid in affirming the Sudan's liability.

[00:48:55] Speaker 03:
You found, I quote,

[00:48:58] Speaker 03:
One crucial factor in Sudan's liability was that Sudan state owned bank, the bank aided here by BNP, I quote, gave out access to the formal banking system, which proved useful for wandering money and financing terrorist operations.

[00:49:15] Speaker 03:
That's it, page 795 of your October decision in the Sudan case.

[00:49:22] Speaker 03:
On causality, Judge Griffith, you were asking me this, the specific statement of the restatement, section of the restatement is section 390 of the restatement second, and that's when you give something to a bad actor directly or through another person.

[00:49:42] Speaker 03:
quote, your revival.

[00:49:44] Speaker 03:
And that echoes the Supreme Court's decision, Milwaukee-St.

[00:49:49] Speaker 03:
Paul Railway Company versus Kellogg, 94 U.S.

[00:49:52] Speaker 03:
469, older case.

[00:49:55] Speaker 03:
The proximate cause of a disaster, quote, may operate through successive instruments, close quote.

[00:50:05] Speaker 03:
Mr. Friedman proposes

[00:50:09] Speaker 03:
of an idea of pleading that even after Iqbal has nothing to do with rule eight and has more to do with 19th century forms than anything we know under the federal rules.

[00:50:25] Speaker 03:
Chief Justice Marshall in Marbury.

[00:50:28] Speaker 03:
Okay, we have your argument.

[00:50:30] Speaker 02:
Thank you very much.

[00:50:31] Speaker 02:
The case is submitted.

[00:50:35] Speaker ?:
Thank you.