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Case number 23-7080 et al.

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A state of Jeremy Isidore Levin et al, James Owens et al, at balance, versus Wells Fargo Bank NA and United States of America.

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Ms.

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Smith for the balance, a state of Jeremy Isidore Levin et al, Ms.

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Wagner for the balance, James Owens et al, Mr. Huda for the appellee, United States of America, Mr. Lakatos for the appellee, Wells Fargo NA.

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Good morning.

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Just for the appellees, just so you know, we're going to hear from the government first and then from Wells Fargo in case the list on the order suggested otherwise.

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I've been in those seats, you know, with the time ticking down, worrying when I have to get up.

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So Wells Fargo will be last.

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The time limits will be as we, as established.

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Ms.

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Smith.

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Good morning, Your Honors.

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May it please the court, Suzelle Smith for the Levens.

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So I'm back for the second time.

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Let's start.

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Since I have limited time, I'm really going to compress this and do speed chess here.

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One thing that everyone agrees on in this case, everybody, is that what we have here are originally frozen or blocked assets, frozen by executive orders, regulations, IEEPA, in October of 2019.

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Now, I am gonna, and also everybody agrees that TRIA, T-R-I-A, the terrorist statute, is implicated

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by the fact of the freezing of these Iranian assets in 2019.

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Now, I'm gonna paraphrase the government, but the government sets out the issue as the federal district court lacked jurisdiction under TRIA to issue the Levin Ritz because the specific OFAC license issued to DOJ here unblocked the assets which are still being held

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at Wells Fargo in a blocked account.

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The OFAC license at issue here did not unblock these assets, and it could not.

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First of all... It turns on whether or not the assets are still frozen, right?

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Yes, Your Honor.

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And whether... That's an undefined term.

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So we default to ordinary meaning and usage.

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So for the term frozen, Your Honor?

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For the term frozen.

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So OFAC refers to blocked assets, and it defines blocked assets as seeds of frozen.

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Seeds are frozen, and those are undefined.

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And this is the first time that the argument has been made by the government or anybody else that blocked assets are not frozen when they're blocked under IE EPA and OFAC regulations.

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But we spent some time in our reply brief dealing with the fact that blocked assets and frozen assets are used as equivalents and as synonyms in the OFAC regulations, in the case law.

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And there's nothing that, there's no authority that blocked assets under the IEPBA and the regulations in the OFAC.

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I'm sorry, blocked asset is a defined term.

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Yes.

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either seized or frozen.

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Correct.

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Everyone seems to agree the assets weren't seized.

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I disagree and we spent some time in the brief on seizures.

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Let's assume I think your argument, they have to be one or the other.

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They can be seized and.

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Seized or frozen.

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They can be seized and frozen.

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So I think your frozen argument is stronger than your seized.

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Let's deal with frozen.

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Let's deal with frozen.

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Undefined term, so we default to ordinary English usage.

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And I can imagine two plausible meanings of frozen in the phrase frozen assets.

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One is, can you easily convert the assets into cash?

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And that's a good one for you.

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you win if that's what that means.

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But I can imagine another one, I mean, frozen, a stronger sense of like absolute zero frozen, like no one can do anything with the assets.

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And I'm not sure why that's wrong.

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And if that's the right way of thinking about frozen, maybe you have some difficulty because of the license.

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So your honor, one of the reasons we spent a great deal of time going over

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frozen and blocked and their equivalencies is that the United States Supreme Court, the OFAC regulations, every source you can look at in the context, which is what this court needs to look at.

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We're not talking about frozen peas here.

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We're talking about terrorist assets that have been blocked and frozen under congressional law, under executive order, and under the regulation.

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But the reason that frozen

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can't mean cannot be dealt with at all, is that if it meant cannot be dealt with at all, then the government couldn't come in and get a license to deal with these assets under TRIA to operate and do what it wants to do, which is pursue its forfeiture case.

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The Levens, as victims under case law and binding authority, this circuit.

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Why is that?

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Why is that true?

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They were frozen.

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They were frozen by operation of IEPA and or the blocking.

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And government came in and got a license which might or might not have unfrozen.

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So first they're frozen.

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I think we agree.

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First they're frozen.

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Now the question for the court is when the license to litigate was issued by

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by FRIA, sorry, by too many initials here, by OFAC.

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When the license was issued, did that license unblock the assets or was that license legitimate to do anything?

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If the assets are blocked and frozen, both the government and the victim and the victims can do different things to try to collect on those assets.

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One thing the government can do and must do is go to OFAC

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and ask for a license to litigate, to come to court, to try to make its forfeiture claim.

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And if you look at the OFAC license itself, that is exactly what it does.

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And the OFAC license, Your Honor, refers multiple times to the blocked assets.

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The OFAC license doesn't say, these are now unfrozen or unblocked.

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The OFAC license doesn't say that the government

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can go to the district court under the Forfeiture Act and receive those assets, what it says is, this is not a transfer.

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If you look carefully at the license itself, it says, this is not a transfer.

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This is not a final order.

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What this is is permission for the government to try to effect a turnover.

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which is not of course what the victims have to do.

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We don't have to go to OFAC.

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So section 1A of the license does say in an unconditional way that the United States, the DOJ and other federal agencies are authorized to engage in all transactions necessary, ordinarily incident to affect the forfeiture of the funds.

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So I think the government says that is an affirmative authorization to deal in the funds.

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And that before this license issued, nobody had any authorization to deal on the funds.

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And you should regard that as unfreezing the assets.

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So is that wrong?

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So the government's position is any OFAC license, not just this one, but any OFAC license is obtained.

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unfreezes and unblocks the assets.

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That's the government position.

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Because it authorizes the government to deal in the assets.

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The government actually says any license, not just the one that we're dealing with now, but let me deal with the one that we're dealing with now.

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It specifically says authorized to effect the forfeiture in blocked funds.

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It doesn't say these funds are now unblocked or unfrozen, your honor.

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It says to affect a turnover.

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And then it goes on to say further down that the only way you get authority to actually receive those funds or to change the status, which are still held in Wells Fargo.

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Wells Fargo didn't pay them out to the government.

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It's conditional on coming to court and getting a valid final forfeiture order.

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And other words in the license say,

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this license is conditioned on receiving such a valid forfeiture order from the district court.

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So the government doesn't have what it would need to actually move the possession of the funds through a forfeiture order to the government.

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So the government is faced with continued blocked funds and frozen funds, no authority that they become unfrozen or thawed out.

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because of this conditional license.

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And there's no case, no case cited by the government that such a conditional license as this would unfreeze or unblock.

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There's no case that says that.

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So all the cases that are cited by the government, Your Honors, they are, first of all, from other circuits, but they're old cases and they're old cases which don't deal with the issue before the court today.

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In some of the Holy Land, I think there was no judgment.

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We have a judgment.

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We're already ahead of the government, Your Honors, in the sense that we have a judgment against Iran, and we're just trying to collect.

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The government's trying to get started with a forfeiture action under different theories.

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We don't have to prove that the assets were used.

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We just have to prove that they were property of.

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But the government is back in line, and the district court held that it did not have jurisdiction

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to issue the writs in our case because this forfeiture action, this forfeiture license, not the filing, but the license takes those assets out from under TRIA's notwithstanding language and shall provision that blocked assets, frozen assets, shall be available.

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There just isn't any authority and no rational support.

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Does it matter whether the funds were blocked when you moved forward of attachment, or does it matter whether the funds are blocked now?

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It matters whether the funds are blocked now, certainly, Your Honor.

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When the funds are blocked and you get your judgment, in every case over the past 40 years where we've been dealing with terrorist collection of judgments, what matters is, are the funds blocked now, so can you come into court and go and

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and petition the court under TRIA.

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So there's no question here, these funds are blocked now and we're unfrozen.

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So if your honors rule appropriately and correctly as we think you should, that nothing unfroze these, including this, and it couldn't under TRIA's notwithstanding language, then we're back to court with a valid writ.

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Thank you.

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We'll give you some rebuttal.

[00:12:04] Speaker 02:
Thank you.

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Ms.

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Wagner, your turn.

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May it please the court, Jessica Wagner for the Owens, Muella, and Calica Pellants.

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I'd like to reserve two minutes for rebuttal.

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I want to start by addressing this point about whether the funds are still frozen and blocked for purposes of TRIA and then discuss the prior exclusive jurisdiction doctrine.

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So beginning with that first point, the government cannot contest that today, no one, not Iran,

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not Crystal Holdings, not Wells Fargo, and not even the government is able to transact in the funds.

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The funds were blocked in an order issued under AIIPA, and TRIA defines a blocked asset as an asset that is frozen under AIIPA.

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Here, the funds unquestionably meet that definition.

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May I ask you the question that I asked Ms.

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Smith?

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Are we supposed to figure out whether the funds are blocked now, or are we supposed to figure out whether they were blocked when you moved for a right of attachment?

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I don't think that the answer to that question matters, because I think they were blocked both at the time of attachment and they are blocked now.

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But if I had to pick one, I would say assess it at the time of attachment.

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And let me.

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Why is that?

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Why at the time of attachment?

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Why is that the time that matters?

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Yeah.

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Yes.

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So if you look at the text of TRIA, it says first it defines a blocked asset as an asset that is frozen under AIIPA.

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But then it says that licensed assets are not included within the definition of blocked asset where the license was specifically required by a statute other than AIIPA.

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And so the text of TRIA illustrates that where assets are blocked under AIIPA, but then a license

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is issued under right, but the funds still qualify as blocked assets for purposes of trade.

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That's why I think you should look at the time, at the initial time.

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But let me address why the funds are still blocked today.

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And there can be no question about that.

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From whose perspective do we consider whether the assets are frozen?

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From the government's perspective or from Wells Fargo's perspective?

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I think that the key perspective, Your Honor, is neither of those parties.

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It's Iran.

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Because Shria says that you are attaching blocked assets of a state sponsor of terrorism.

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So the key is whether the assets are blocked as to the state sponsor of terrorism, which is Iran.

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But again, the assets here are blocked both as to Wells Fargo and as to the government.

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Let me talk about the actual forfeiture.

[00:14:45] Speaker 08:
Much more clear.

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I take your point about Iran, but what I was thinking is the block is much clearer

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as to Wells Fargo which can't do anything with them unless and until they get a forfeiture order and then there's one and only one thing they can do just hand them over to the government a little less clear as to the government their position is there these assets out there someone else owns them the government is

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proceeding with an adjudication to transfer ownership, and they're doing that, and that's sort of what they would do even without a blocking order.

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So from their perspective, seems like there's been a significant thaw.

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So I disagree with that, Your Honor, respectfully, because that's not what the license says.

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So if you look at the terms of the license, and this is at JA402, it is a limited conditional future license.

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Now again, the government's own regulations say that we have to, that licenses can unblock, remove blocking prohibitions, but only to the extent specifically stated by the terms.

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We have to look directly at the terms of the license.

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And the license here authorizes the government to take possession and ownership of the funds from Wells Fargo only after it has furnished a valid forfeiture order to Wells Fargo.

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Here, the government is far from having a valid order of forfeiture.

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And so the government cannot do anything with the funds today.

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Can I ask the question that I asked before, which is,

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That's certainly true as to 1B.

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But for some reason, and I'm genuinely mystified by this, 1A is not conditional on securing a forfeiture order.

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And it's unclear to me what, if anything, 1A authorizes.

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So can you explain to me why the government might say 1A is not conditional so we can transact in the funds now?

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What's the answer to that?

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I mean, 1A is just, I think, a general statement that says the government can proceed with the forfeiture proceeding.

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But again, if the government had the funds already, that would be different.

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But because the funds are currently held at Wells Fargo, and Wells Fargo is not authorized to do anything with them until we get to 1B, the government cannot do anything with the funds under the terms of license.

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I think it's also instructive here, Your Honor, if you look at JA 287 to 80.

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to 288, which is where the government requested the license, and it was to perfect forfeiture.

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It's very clear in the request for the license that it's asking for a license authorizing it to take possession of the funds once it completes this forfeiture process.

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So I think you should look at that to inform the license itself.

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But again, the 1A says it is authorized to engage in transactions necessary to affect the forfeiture.

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But there's nothing that it can do because the funds are at Wells Fargo.

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Wells Fargo is unauthorized to release them to the government until that condition in 1B is satisfied.

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So today, the government can't move the funds.

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But again, I think the key party is not even the government.

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It's Iran.

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And I think that that's the point about frozen, going back to some of your questions, Judge Katzis.

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I don't think it matters, because here the funds are frozen as to all parties.

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But from Trudy's perspective, the key is whether the funds are frozen as to Iran.

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There's nothing in the statute that says it has to be frozen in every aspect.

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And I think it would be sort of observed to have a role to that effect, especially when you're talking about the government, because the government is the one who blocks the funds in the first place.

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The government always has an inherent authoring discretion to move the funds.

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There's numerous cases the Supreme Court has talked about.

[00:18:21] Speaker 08:
Fair point, except this whole scheme creates this weird distinction between OFAC and DOJ in its capacity seeking the forfeiture.

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It's not a unitary executive for that purpose.

[00:18:42] Speaker 03:
I mean, I would still argue that they're all under the executive branch, Your Honor, but again... Me too, but that's not how it works.

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Be that as it may, the key is it doesn't even really matter because the government can't do anything with the funds here.

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I do want to just briefly address the other circuit court cases that have dealt with licenses.

[00:19:03] Speaker 05:
I do want to hear that, but just very briefly, is it your understanding that essentially in every civil forfeiture proceeding of this kind, the government needs an OFAC license that looks something like this to even start the process?

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So I would say in any instance where the funds are blocked, right?

[00:19:21] Speaker 03:
Obviously, there's forfeiture proceedings where the funds are not blocked.

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Yes.

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And this is the way that the scheme works.

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When Judge Mannion explains this very well in his opinion in the RJ O'Brien decision.

[00:19:34] Speaker 03:
But when funds are blocked under AIIPA, in order to be able to do anything with them under AIIPA, the way

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this regime works, the government has to request a license under APA, and that's why, you know, we see the government here requesting a license once it initiated the forfeiture proceeding.

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If it didn't think it needed one, it wouldn't have done that in the first place.

[00:19:53] Speaker 08:
So turning to the cases, I'll let you dive into them, but my sense was that your position is fully reconcilable with

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Rubin and Weinstein, but not reconcilable with Holy Land and O'Brien.

[00:20:10] Speaker 08:
In order for you to win on this point, we need to create a one-two split.

[00:20:15] Speaker 03:
So I would respectfully disagree.

[00:20:16] Speaker 03:
I think that there is a way for you to rule in our favor and reconcile all of these decisions.

[00:20:22] Speaker 03:
So I'll start by talking about those two cases that you think are not reconcilable.

[00:20:29] Speaker 03:
And I think here's the key distinction.

[00:20:32] Speaker 03:
In neither of those cases were the courts dealing with the tax, the specific license here.

[00:20:37] Speaker 03:
In Holy Land, the Fifth Circuit, and in RJ O'Brien, the Seventh Circuit, there is nothing to indicate that either case involved a conditional limited forfeiture license like we have here.

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In RJ O'Brien, the text of the license was not even in the record or before the court.

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All they have is a stipulation regarding it.

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And neither the parties, I went back and looked for the briefs in this case, neither the parties or the court gave any indication or raised any arguments that we had these limited conditional terms here.

[00:21:05] Speaker 08:
It's not in Holy Land.

[00:21:07] Speaker 08:
I'll go back and reread it, but I thought the gist of it was there was a blocking order and then there's a license allowing the government to pursue a future.

[00:21:18] Speaker 08:
Is that not right?

[00:21:19] Speaker 03:
I think that license there also authorized the government to pursue restraining orders, at least from what the court says in the quoting it.

[00:21:27] Speaker 03:
But we don't have anything else about it.

[00:21:28] Speaker 03:
And we don't have the limitations that we have here, that the government can't actually do anything with the funds, can't take possession of the funds until it obtains a final order of forfeiture.

[00:21:37] Speaker 03:
There is no term like that.

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discussed in any of these cases raised by the parties or discussed by the courts.

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And I think another key point is the parties in both cases did not press the statutory argument that I referenced earlier, which is that the license was required by AIIPA.

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And because it was required by AIIPA by definition, it couldn't unblock the funds.

[00:22:00] Speaker 03:
In Holy Land, the Fifth Circuit didn't address that argument at all.

[00:22:04] Speaker 03:
And in RJ O'Brien, the Seventh Circuit held that that issue was waived.

[00:22:08] Speaker 03:
So because we're dealing with a different license and because we have repeatedly before the district court and before this court raise the specific limited conditional terms of license, as well as the fact that the license because was required by because the funds were blocked under.

[00:22:26] Speaker 03:
I think there's a way that you can rule in our favor without creating a circuit.

[00:22:31] Speaker 08:
Do you think Judge Mannion was over reading?

[00:22:35] Speaker 08:
Holy Land, I took him to be saying that Holy Land establishes only what the government says here, but was wrongly decided.

[00:22:47] Speaker 03:
I mean, I do think that there were aspects of Holy Land that were wrongly decided, but I don't think that this court has to disagree with Holy Land to rule in our favor.

[00:22:55] Speaker 03:
So in Holy Land, the Fifth Circuit really guts the notwithstanding clause of TRIA.

[00:22:59] Speaker 08:
How would we do that?

[00:23:01] Speaker 08:
One point which I get is we say.

[00:23:04] Speaker 08:
The statutory issue wasn't addressed, so it's a drive by.

[00:23:11] Speaker 08:
Is there anything else you think the license was broader?

[00:23:14] Speaker 03:
Again, there is no indication that there were the specific limited conditional terms in those licenses.

[00:23:20] Speaker 03:
There was nothing that said that the government could not take possession or ownership of the funds until after it had obtained a valid order of forfeiture.

[00:23:30] Speaker 03:
And I guess the other point I would point out is the timelines in those cases were very different.

[00:23:35] Speaker 03:
In both Holy Land and in RJ O'Brien, the government had already obtained licenses and proceeded with their forfeiture actions before the plaintiffs in those cases had even gotten judgments against the state sponsors of terrorism, let alone sought to attach the rights.

[00:23:51] Speaker 03:
So in Holy Land, by the time which involved criminal forfeiture, by the time that

[00:23:58] Speaker 03:
The plaintiffs were raising the retria argument.

[00:24:01] Speaker 03:
They were doing it after the government had already obtained a preliminary order of forfeiture, entitling it to the funds.

[00:24:07] Speaker 03:
That's completely different.

[00:24:08] Speaker 03:
The government doesn't have that here.

[00:24:10] Speaker 08:
Yeah, that's your fallback argument that you got your judgment lean in time.

[00:24:15] Speaker 08:
But I'm just trying to focus on the threshold question, whether a license like this unfreezes.

[00:24:23] Speaker 03:
Yeah, and again, I think it can't for the two reasons.

[00:24:25] Speaker 03:
Because one, the text of TRIA says that it can't.

[00:24:28] Speaker 03:
TRIA says that license assets are not blocked assets unless the license was specifically required by a statute other than AIIPA.

[00:24:38] Speaker 03:
Here, the license was required by and issued under AIIPA because the funds were blocked by AIIPA.

[00:24:44] Speaker 03:
So there's a statutory reason why the license cannot block the funds.

[00:24:47] Speaker 03:
And there is the factual reason that the terms of the license here simply just do not block the funds again.

[00:24:52] Speaker 03:
You can ask the government, no one today can transact on the funds.

[00:24:56] Speaker 03:
To say that they are not blocked would be totally incongruous with the actual facts on the ground.

[00:25:02] Speaker 05:
So I just want to make sure I'm parsing the different arguments correctly.

[00:25:06] Speaker 05:
So I think the statutory argument you were just referencing is the one that depends on the exception.

[00:25:12] Speaker 05:
And but even putting that aside, and I very much understand the license-specific argument, you have another argument that the word frozen, before you look at the exception, it just means from Iran's perspective, not the US's perspective.

[00:25:28] Speaker 05:
And that argument may be right, but that's the argument that would be inconsistent, I think, with the Fifth and Seventh Circuits, right?

[00:25:35] Speaker 05:
That frozen is just from the perspective of the blocked entity.

[00:25:41] Speaker 03:
Yes, I don't know that they got into that argument in those cases.

[00:25:45] Speaker 03:
But I mean, again, I was trying to outline a path for how you could rule in our favor without having to disagree with those circuits.

[00:25:50] Speaker 03:
I think you could easily reach that argument.

[00:25:52] Speaker 05:
That position is certainly the broadest position.

[00:25:54] Speaker 03:
Yes.

[00:25:54] Speaker 03:
And I think it's right just because, again, this is about TRIA.

[00:25:57] Speaker 03:
It's about whether the assets are blocked as to the state sponsor of terrorism we're trying to attach.

[00:26:01] Speaker 03:
It's not really about whether the government can transact with them.

[00:26:04] Speaker 03:
I mean, Danes and Moore.

[00:26:05] Speaker 03:
The Supreme Court says that blocked assets are usually retained for the president's discretion.

[00:26:10] Speaker 03:
So whether the government can move them shouldn't really be relevant to the definition of whether they're blocked as to a state sponsor of terrorism.

[00:26:17] Speaker 07:
I wonder what's wrong with this understanding of

[00:26:22] Speaker 07:
the Civil Forfeiture Statute and TRIA.

[00:26:26] Speaker 07:
So as I understand it, the Civil Forfeiture Statute says when the US can seize assets, sort of like a sword.

[00:26:36] Speaker 07:
When can the US go get something?

[00:26:38] Speaker 07:
And sovereign immunity, normally something of a shield for foreign countries.

[00:26:43] Speaker 07:
TRIA and FSIA take away that shield to provide immunity.

[00:26:49] Speaker 07:
That doesn't change anything about the sword.

[00:26:53] Speaker 07:
It doesn't change anything about what the civil forfeiture statute says the US can and can't do.

[00:27:01] Speaker 07:
And if we look at it that way, they're not in conflict.

[00:27:05] Speaker 07:
And so the notwithstanding language in TRIA doesn't do any work to upset what the civil forfeiture statute says, which is these funds are in the custody of the attorney general.

[00:27:19] Speaker 03:
So the funds, again, are not actually in the custody of the attorney general.

[00:27:22] Speaker 03:
They are in the custody of Wells Fargo.

[00:27:23] Speaker 07:
I think that's only if we think the civil forfeiture statute in 981C doesn't apply.

[00:27:30] Speaker 03:
No, that is the actual facts of the record.

[00:27:33] Speaker 03:
They are held at Wells Fargo's accounts.

[00:27:36] Speaker 03:
The government, again, has not been able to take possession or ownership of them, and it's not authorized to do so by the terms of the license.

[00:27:44] Speaker 03:
But going to the TRIA notwithstanding clause point, which I think was the heart of your question,

[00:27:49] Speaker 03:
TRIA's notwithstanding clause is very clear.

[00:27:52] Speaker 03:
Victims of terrorism shall be able to attach blocked assets of state sponsors of terrorism, notwithstanding any other provision of law.

[00:28:00] Speaker 03:
Congress enacted that provision after victims had been thwarted over and over, usually by the executive, from being able to go after blocked assets and obtain, satisfy their judgments.

[00:28:13] Speaker 07:
If I may interrupt, I thought I agree with everything you just said there, but I thought that what the executive had done to thwart was in part invoking the FSIA, its ability under the FSIA to cancel out what the text that later Congress insisted on with Tria.

[00:28:31] Speaker 03:
You're exactly right.

[00:28:32] Speaker 03:
That is one of the many things.

[00:28:33] Speaker 03:
I think that was the specific thing that prompted TRIA, but there had been a number of cases and issues prior to that point.

[00:28:38] Speaker 03:
But yes, the FSA has a provision that allows victims to attach blocked assets.

[00:28:44] Speaker 03:
It allowed the president to waive that provision.

[00:28:45] Speaker 03:
The president did so almost immediately.

[00:28:48] Speaker 03:
And then Congress said, no, we're passing TRIA, notwithstanding any other provision of law does not have that broad presidential waiver provision.

[00:28:56] Speaker 03:
Tree is very clear that victims of terrorism need to be able to have a substantive cause of action to attach blocked assets.

[00:29:03] Speaker 03:
And the government says, well, you can do this in the context of the forfeiture statute.

[00:29:08] Speaker 03:
Just bring your claims there.

[00:29:09] Speaker 03:
But they're being duplicitous in that respect because they have already previewed for us their position, which is that in order to have standing in the forfeiture action, you have to have a valid right of attachment.

[00:29:21] Speaker 03:
And they point to, and this court has not addressed it to my knowledge, but other courts have held that judgment creditors have to have, unsecured judgment creditors don't have standing in a forfeiture action.

[00:29:31] Speaker 03:
To have standing, you have to have a valid linear attachment.

[00:29:34] Speaker 03:
And so the government is essentially saying lose, lose.

[00:29:36] Speaker 03:
You can't have your writ actions to get you the writ that gives you standing.

[00:29:40] Speaker 03:
And then you must bring your claims in the forfeiture action.

[00:29:42] Speaker 03:
We're going to say you don't have standing because you don't have a writ.

[00:29:45] Speaker 07:
I follow that.

[00:29:45] Speaker 07:
And I take the point about the history and the purpose, the history behind TRIA and the purpose of TRIA.

[00:29:52] Speaker 07:
But what about TRIA's text should make me think it's a priority rule, it's a substantive rule about

[00:30:00] Speaker 07:
who gets a terrorist state's money, as opposed to just saying the terrorist state doesn't get to keep its money.

[00:30:11] Speaker 03:
I think the notwithstanding of the provision law is hard.

[00:30:13] Speaker 03:
I mean, this court said in Crowley that it's harder to imagine a clear statement than notwithstanding any other provision of law.

[00:30:21] Speaker 03:
And that means that any other provision of law that would conflict and get in the way of our ability to bring a substantive cause of action against the assets, TRIA overrides that.

[00:30:32] Speaker 07:
It seems like it could instead mean notwithstanding any law that gets in the way of Iran being immune.

[00:30:41] Speaker 07:
And I agree with you.

[00:30:44] Speaker 07:
Let's say there was another statute out there that said Iran is not immune.

[00:30:48] Speaker 07:
That notwithstanding language would be very powerful in TRIA.

[00:30:50] Speaker 07:
And we would read TRIA to preempt a statute, or in this case, a background principle of sovereign immunity.

[00:30:58] Speaker 07:
But it seems like all it does is just say, notwithstanding anything that might make Iran immune, Iran is not immune.

[00:31:08] Speaker 07:
Now that we've established that, let's see who gets to take Iran's money.

[00:31:12] Speaker 07:
And that question seems like it's answered by the civil forfeiture statute.

[00:31:17] Speaker 03:
So I respectfully disagree with that reading, Your Honor, for two reasons.

[00:31:20] Speaker 03:
First, I think the text of the statute is incredibly broad.

[00:31:24] Speaker 03:
Notwithstanding any other provision of law, it doesn't say it's not limited in any way to immunity.

[00:31:30] Speaker 03:
And then again, we go back to the history.

[00:31:32] Speaker 03:
Congress enacted TREA after the executive branch waived this provision of the FSIA that allowed victims to attach black funds.

[00:31:39] Speaker 03:
Congress is very clear.

[00:31:40] Speaker 03:
If you look at the legislative history

[00:31:43] Speaker 03:
Some of the cases discusses that they were trying to ensure that victims of terrorism had a way to satisfy their judgments and were able to attach blocked assets.

[00:31:53] Speaker 03:
Nothing that I'm aware of would indicate that they were trying to eliminate two needs, notwithstanding any other provision of substantive law, here the forfeiture statute.

[00:32:00] Speaker 03:
The other third point I would add is

[00:32:03] Speaker 03:
The district court and the government have essentially conceded that.

[00:32:06] Speaker 03:
I think it's very interesting when, in the FSAA context, which was the other alternative basis for our rights, both the government and then the district court accepted this argument, argued that the forfeiture statute's exclusive jurisdiction and provision should apply.

[00:32:20] Speaker 03:
They don't make that argument in the context of TRIA because they recognize that TRIA's notwithstanding clause overrides the substantive statute.

[00:32:29] Speaker 07:
I am grateful and I appreciate that.

[00:32:31] Speaker 07:
If I could just one question on the commerce in the United States question, the commercial activity United States question.

[00:32:37] Speaker 07:
Here we have a foreign seller using a foreign bank, foreign buyer using a foreign bank.

[00:32:43] Speaker 07:
Do you have any judicial precedent where those are the facts and the court says this is commercial activity in the United States?

[00:32:53] Speaker 03:
So I think the key is that the funds came through the United States.

[00:32:56] Speaker 03:
That's how the United States got involved with the commercial transaction.

[00:33:00] Speaker 07:
I understand.

[00:33:03] Speaker 07:
I think that may or may not be a winning argument.

[00:33:05] Speaker 07:
I'm just wondering if any court has dealt with those facts.

[00:33:08] Speaker 07:
Funds coming through the United States, but foreign seller, foreign buyer, foreign seller chooses a foreign bank, foreign buyer chooses a foreign bank.

[00:33:14] Speaker 07:
And the court says, well, because the funds came through an intermediate US bank,

[00:33:19] Speaker 07:
it's commercial activity in the United States.

[00:33:21] Speaker 07:
You might still win even if a court hasn't said this already.

[00:33:23] Speaker 07:
I'm just wondering if a court has said this already.

[00:33:26] Speaker 03:
I'm not aware of a court that has said that already.

[00:33:28] Speaker 03:
I can go back and think, but I'm not aware of anything off the top of my head.

[00:33:32] Speaker 03:
I just would, again, reiterate that the key is that it was commercial activity that was coming through the United States.

[00:33:39] Speaker 03:
If it was all overseas, we would not be here.

[00:33:43] Speaker 03:
We're here because it's in the United States.

[00:33:44] Speaker 08:
is the priority question before us.

[00:33:49] Speaker 08:
So I had thought, Judge Bosberg's reasons for rejecting your TRIA argument were number one, unfreezing, and number two, prior exclusive jurisdiction.

[00:34:07] Speaker 08:
And neither of those

[00:34:10] Speaker 08:
really speak to the question of what's going to happen when you fight with the government and with the other claimants to figure out who gets how much of this pot of money.

[00:34:27] Speaker 03:
So I think, again, that tree is not less standing.

[00:34:29] Speaker 03:
Any other provision of law clause answers that question, certainly as to the government.

[00:34:34] Speaker 08:
But the question about

[00:34:38] Speaker 08:
how TRIA does or doesn't interact with the civil forfeiture statute was not, did Judge Bosberg address that?

[00:34:50] Speaker 03:
He certainly addressed the scope of the notwithstanding clause when he was talking about the prior exclusive jurisdiction doctrine.

[00:34:56] Speaker 03:
Again, when he talked about the FSIA basis for our rights, which I was talking about earlier, he noted that there wouldn't be the notwithstanding argument that there is in the tree of context for those.

[00:35:08] Speaker 03:
I think that he did address that.

[00:35:10] Speaker 08:
I mean, ultimately.

[00:35:11] Speaker 08:
He certainly addressed it as to prior exclusive jurisdiction.

[00:35:17] Speaker 08:
Yes.

[00:35:17] Speaker 08:
But we can resolve

[00:35:20] Speaker 08:
We might resolve that issue in your favor without getting into anything that decides the question of how TRIA does or doesn't interact with the civil forfeiture statute.

[00:35:34] Speaker 03:
Yes, I mean, I think this court can certainly reserve that question for the future case.

[00:35:38] Speaker 03:
And again, once we have valid writs, which we would ask the court to rest.

[00:35:42] Speaker 03:
Exactly, Your Honor.

[00:35:44] Speaker 03:
Because then that will be the question.

[00:35:45] Speaker 03:
Because the forfeiture action we have, once we got our writs, we intervene in the forfeiture action and raise the claim where we started our writs because we have standing based on those writs.

[00:35:53] Speaker 03:
So I think that there, that could be a question in the future.

[00:35:56] Speaker 03:
I mean, I would

[00:35:57] Speaker 03:
Say that the court could simply say now that notwithstanding the provision of law necessarily overrides the forfeiture statute, but it can easily reserve that question for a future day.

[00:36:05] Speaker 03:
I do want to just speak briefly to the prior exclusive jurisdiction doctrine since we haven't talked about that.

[00:36:12] Speaker 03:
Three points here.

[00:36:13] Speaker 03:
Yes, your honor.

[00:36:15] Speaker 03:
First, the doctrine was never designed to put litigants out of court.

[00:36:18] Speaker 03:
It was supposed to be a procedural rule of forum selection, not a substantive rule of priority.

[00:36:24] Speaker 03:
Neither the government nor the district court were able to identify a single case extending the doctrine to cases

[00:36:31] Speaker 03:
before the same court, let alone before the same judge.

[00:36:35] Speaker 03:
Second, to the extent that the rationale of the doctrine, judicial economy and efficiency, had any purchase here, that rationale was fully satisfied when Judge Bates transferred the actions to Chief Judge Roseberg.

[00:36:48] Speaker 03:
And notably, in their motion to reassign the rights, the government raised the prior exclusive jurisdiction doctrine.

[00:36:56] Speaker 03:
They said they were not asking for our rights to be barred under that doctrine, but that the rationale of the doctrine should inform the justifications for transfer.

[00:37:04] Speaker 03:
In his opinion, Judge Bates cited the doctrine and the government's invocation of it.

[00:37:09] Speaker 03:
And again, without formally applying the doctrine, said that the interest served by the doctrine informed his view that reassignment was the most efficient, orderly way to resolve the dispute.

[00:37:20] Speaker 03:
And so then once the cases were before Chief Judge Boasberg, even the spirit of the doctrine was no longer at issue, and it was fully satisfied.

[00:37:26] Speaker 03:
We understand.

[00:37:27] Speaker 08:
We'll give you some time on that.

[00:37:29] Speaker 08:
Thank you, Your Honor.

[00:37:33] Speaker 08:
All right, we'll hear from the government.

[00:37:43] Speaker 06:
Good morning, Your Honor.

[00:37:44] Speaker 06:
Brian Hudak from the U.S.

[00:37:45] Speaker 06:
Attorney's Office on behalf of the United States may please the court.

[00:37:49] Speaker 06:
The parties return to this court again in these collection proceedings, which were filed against funds after the government instituted its forfeiture action with an eye to ceding the victims compensation fund for terrorist victims.

[00:38:01] Speaker 06:
The forfeiture court exercised interim jurisdiction over them in that forfeiture case.

[00:38:06] Speaker 06:
On the first trip to this court, the court answered a very narrow question.

[00:38:08] Speaker 06:
Did Iran have an attachable property interest in funds blocked mid-transfer under TRIO?

[00:38:14] Speaker 06:
And answer that question in the affirmative.

[00:38:17] Speaker 06:
On this appeal, the creditors asked this court to make much broader holdings, which will likely create chaos in this area of the law and risk unintended consequences in other cases.

[00:38:25] Speaker 06:
In contrast, the government asked the court to affirm on very narrow grounds that promotes uniformity in the law.

[00:38:30] Speaker 06:
I'll start first with the prior exclusive jurisdiction doctrine.

[00:38:34] Speaker 06:
The government agrees with Wells Fargo that the court should hold that doctrine applies here, which resolves both the TRIA and the Foreign Sovereign Immunities Act's claims.

[00:38:43] Speaker 06:
Whichever proceeding first exercises in-rem quasi-in-rem jurisdiction over the property, that exercise is exclusive until that suit reaches finality.

[00:38:52] Speaker 06:
It secures predictability for financial institutions and neutral holders of disputed property.

[00:38:57] Speaker 06:
Chief concern from the Greenbaum panel opinion.

[00:39:00] Speaker 08:
It prevents multiple proceedings from prior exclusive jurisdiction and bar different parties from having claims against the same piece of property.

[00:39:10] Speaker 06:
If if if they are, if a court has exercised.

[00:39:15] Speaker 06:
Quasi in Rem or in Rem jurisdiction over the piece of property.

[00:39:18] Speaker 06:
Yes, if we're talking about claim can't even be litigated.

[00:39:22] Speaker 06:
without intervening in that suit or seeking to participate in that suit to assert their claim.

[00:39:28] Speaker 06:
Typically, you would think of when you just have disputed issues of property.

[00:39:32] Speaker 08:
It goes to competing sovereigns fighting over the same piece of property.

[00:39:42] Speaker 08:
It probably goes to competing district courts competing over the same piece of property.

[00:39:50] Speaker 08:
It may go to

[00:39:53] Speaker 08:
different district judges in the same district competing, but.

[00:39:58] Speaker 08:
I mean, all that's been solved.

[00:40:00] Speaker 08:
Chief Judge Boesberg has the three.

[00:40:04] Speaker 06:
Claims before sure, Your Honor, but jurisdiction is this court has routinely held is measured throughout the proceeding, so it has to be there from the instant the suit is filed.

[00:40:13] Speaker 06:
The proceeding is filed all the way through its its lifespan.

[00:40:18] Speaker 06:
So when these were filed, they were not.

[00:40:20] Speaker 08:
Defects can be cured.

[00:40:21] Speaker 06:
Can't be cured.

[00:40:23] Speaker 08:
Well, jurisdictional defects at the outside of the case that your transfer if someone files in a court without jurisdiction, that court can transfer it to transfer the case to a different court, which has jurisdiction.

[00:40:36] Speaker 06:
For personal jurisdiction, but for subject matter jurisdiction, the limitation cannot be waived.

[00:40:41] Speaker 06:
It cannot be excused.

[00:40:42] Speaker 06:
The court is an independent obligation to raise it on its own accord.

[00:40:47] Speaker 06:
These are not, you know, in jurisdiction needs to last throughout the entire proceeding from the very instance it's filed.

[00:40:52] Speaker 06:
to when cert is denied in the Supreme Court or if the Supreme Court issues its opinion.

[00:40:57] Speaker 06:
So I don't believe that subject matter jurisdiction defects can be resolved midway through the case and have them be cured.

[00:41:05] Speaker 08:
Moreover, if the prior exclusive jurisdiction doctrine, you know, turned... Suppose they file today, they file a writ of attachment in the DDC and say, please assign this case or this case must be assigned to Chief Judge Bosberg.

[00:41:22] Speaker 08:
for the same decision.

[00:41:24] Speaker 06:
Again, I think the cases that we cite talk about suits and there's a reason for that because the suits themselves will have substantive law governing the claims in them.

[00:41:33] Speaker 06:
The suits will have issues about who can participate in them and who cannot.

[00:41:38] Speaker 06:
And those suits

[00:41:39] Speaker 06:
are the thing that adjudicates the property rights of the participants.

[00:41:45] Speaker 06:
And so when we think of a typical dispute with an innocent owner who is facing competing claims to the same piece of property.

[00:41:54] Speaker 08:
How, in your view, could these groups of plaintiffs litigate their TRIA and FSIA issues?

[00:42:06] Speaker 08:
They file the separate action you say this is prior exclusive jurisdiction.

[00:42:11] Speaker 08:
They try to intervene before they get the rid of attachment and you say no standing because you're an unsecured creditor.

[00:42:19] Speaker 08:
Yeah, I think and then you're just converting this doctrine, which is.

[00:42:24] Speaker 08:
You know at at best a front end screen to get everything before one tribunal at worst.

[00:42:32] Speaker 08:
A squishy doctrine of comedy into.

[00:42:36] Speaker 08:
an absolute priority rule that whoever files first gets the priority on the competing claims to the assets.

[00:42:45] Speaker 06:
I think when it comes to answer your first question about how they could have pursued their atria attachment against these assets, if they had done that before the United States filed its forfeiture reaction, they could have.

[00:42:56] Speaker 05:
Isn't that impossible, the way these work?

[00:42:58] Speaker 05:
is the only way the public learns is when you file a civil forfeiture action.

[00:43:02] Speaker 05:
Is that incorrect?

[00:43:03] Speaker 06:
That's incorrect.

[00:43:04] Speaker 06:
So, I mean, there are plenty of tree of collection actions brought by victim creditors against assets that are blocked here in the United States where they are filed before the United States has sought to forfeit them.

[00:43:14] Speaker 06:
So they get information from different sources.

[00:43:17] Speaker 06:
The Freedom of Information Act provides information.

[00:43:19] Speaker 06:
There is all sorts of information sources that, as my understanding, the creditors use to identify attachable assets, and they go after them.

[00:43:26] Speaker 06:
And there are plenty of cases, most of them are in the Southern District, where creditors have sought to attach blocked assets before the United States has instituted forfeiture proceedings.

[00:43:35] Speaker 08:
Suppose they had done that.

[00:43:38] Speaker 08:
and filed first.

[00:43:40] Speaker 08:
Yes.

[00:43:41] Speaker 08:
Would the prior exclusive jurisdiction bar the United States government from pursuing claims against the same assets?

[00:43:48] Speaker 06:
No, because those those proceedings would have reached finality.

[00:43:51] Speaker 06:
The writs would have been issued.

[00:43:53] Speaker 06:
They would have created judgment liens in the property to be um and the United States when it would file and then they would execute.

[00:44:02] Speaker 06:
They would actually well the United States would would

[00:44:05] Speaker 06:
would file as forfeiture action and they would have under your logic.

[00:44:09] Speaker 08:
They can't because there's a there.

[00:44:12] Speaker 08:
Attachment court on this hypo had prior exclusive jurisdiction.

[00:44:16] Speaker 06:
Yeah, if the court continue to to consider itself to have the exercising jurisdiction over the pieces of property, there would you know that would be how enforcement works.

[00:44:26] Speaker 08:
I think right.

[00:44:27] Speaker 08:
You get the rid of attachment on the front end.

[00:44:29] Speaker 08:
You litigate whatever enforcement issues are open, right?

[00:44:32] Speaker 08:
And then you get the execution order on the back end.

[00:44:35] Speaker 06:
Correct.

[00:44:36] Speaker 06:
So this would go into an area of what is, I think, highly technical law where we are divining distinctions between quasi-INREM and INREM jurisdiction at that point in time.

[00:44:47] Speaker 06:
And we would have to really probe that.

[00:44:49] Speaker 06:
This case does not respond, raise those issues.

[00:44:53] Speaker 06:
So they're not in the briefs, and it has not been fully developed in this record.

[00:44:57] Speaker 06:
I think, at a minimum, if they had obtained the rights of attachment, and the government, after they obtained their rights of attachment,

[00:45:05] Speaker 06:
filed its forfeiture case, they would have standing in the forfeiture case to say, this is my property.

[00:45:11] Speaker 06:
They don't.

[00:45:13] Speaker 06:
They didn't come first.

[00:45:14] Speaker 06:
They came second.

[00:45:15] Speaker 06:
And they can't come and take away the government's forfeiture action as they both, you know, it's not just a writ of attachment.

[00:45:22] Speaker 06:
in their briefs, they set forth what they want to do.

[00:45:25] Speaker 06:
They want to execute on these assets and take them for their own.

[00:45:27] Speaker 06:
I'm not sure which creditor wants to do that, because if you read the notwithstanding clauses abrogating the prior exclusive jurisdiction doctrine, I don't know how they can then use as a shield that doctrine to be first in time, first in right as a TRIA creditor.

[00:45:43] Speaker 06:
The 11 creditors here have three different actions against these same funds.

[00:45:47] Speaker 06:
And so maybe they go to South Dakota even before the mandate issues in this proceeding.

[00:45:51] Speaker 06:
and go and say, court, lift the stay, give me the funds.

[00:45:54] Speaker 06:
It will create chaos because under their interpretation, there is no limiting principle in the text of the statute that would prevent one tree accreditor from going to a quicker federal judge who could exercise jurisdiction over the same asset and get a ruling.

[00:46:09] Speaker 06:
There's not a limiting principle in the text because the text doesn't talk about this at all.

[00:46:14] Speaker 06:
And that is really why the prior exclusive jurisdiction doctrine needs to apply here.

[00:46:18] Speaker 06:
Otherwise, you will have chaos in this collection area.

[00:46:21] Speaker 08:
I'm sorry.

[00:46:22] Speaker 08:
Why is there chaos if there is some mechanism through the prior exclusive jurisdiction doctrine or otherwise to get before one judge all claims against the same piece of property?

[00:46:40] Speaker 06:
which has already happened.

[00:46:41] Speaker 06:
Well, but that's what happened as far as procedural measures.

[00:46:45] Speaker 06:
That was not the outset of the case.

[00:46:47] Speaker 06:
And also, if it doesn't apply, what happens to the South Dakota action?

[00:46:53] Speaker 06:
What happens to the Southern District and New York action?

[00:46:56] Speaker 08:
We sought to move.

[00:46:58] Speaker 08:
Maybe your prior exclusive jurisdiction argument is a lot stronger as to those cases which were filed in different courts.

[00:47:08] Speaker 08:
But then it is to this one, these ones which were filed in the same court and then moved to the same judge.

[00:47:15] Speaker 06:
I understand your honor, but if the doctrine there, they haven't cited a single case where the doctrine has been parsed that thinly.

[00:47:24] Speaker 06:
This doesn't come up.

[00:47:26] Speaker 06:
Well, it has come up.

[00:47:28] Speaker 06:
I mean, I think we cite in our brief a couple cases where this case were filed in the same courthouse and the doctrine was used to preclude that the second time action.

[00:47:37] Speaker 06:
So I understand what your honor is saying.

[00:47:39] Speaker 06:
I understand that it seems unfair that if the government comes to an asset first, that the TRIA creditors are locked out of that asset to pursue it as a recovery for their compensation.

[00:47:50] Speaker 06:
But I think that's the congressional scheme.

[00:47:52] Speaker 06:
And it is reinforced by the more recent congressional enactments, which have civil forfeiture being the fundamental ongoing funding mechanism for the compensation fund, where there are 14,000, 19,000 terrorist victims, including the Owens creditors.

[00:48:08] Speaker 06:
What they are trying to do here is get the funds for themselves, all 9.9 million of them, and have nothing go to the other victims of terror that are participating in the fund.

[00:48:17] Speaker 08:
I mean, you might be right.

[00:48:19] Speaker 08:
There's something in the forfeiture statute that gives you priority over other claimants, even other claimants with terrorism judgments that obviously be a treatish issue.

[00:48:36] Speaker 08:
All I'm suggesting is like, it would seem that those are issues to be sorted out.

[00:48:44] Speaker 08:
for which whichever judge or court takes control over that race.

[00:48:52] Speaker 06:
And certainly, if the writs attach, that will be a consideration that Judge Boasworth will have to reach.

[00:48:58] Speaker 06:
I mean, one of the questions the panel had for my friends on the other side was, has the priority issue been addressed?

[00:49:03] Speaker 06:
It has not.

[00:49:04] Speaker 06:
If the rich stick here, we go to the forfeiture action, they have standing to participate and the government will argue it as a pre-existing forfeiture interest because the government's forfeiture interest arises the instant the funds are subject to forfeiture and their judgment leans came way after that.

[00:49:18] Speaker 08:
And you might win, you might lose, but that doesn't sound like chaos to me.

[00:49:23] Speaker 06:
Well, that doesn't sound like chaos for these creditors and the government here.

[00:49:27] Speaker 06:
But what if the South Dakota action proceeds and

[00:49:33] Speaker 06:
It goes forward and there's a turnover order not withstanding a forfeiture claim with claimants participating here.

[00:49:39] Speaker 06:
What if it goes forward in the Southern District of New York and your honor on that point, we sought to move to consolidate we sought to move to consolidate and transfer the RIP proceeding in New York with the RIP proceedings here with 11 plaintiffs, they resisted and the Southern District refused to do that.

[00:49:54] Speaker 06:
It will create multiple forums exercising multiple incompatible orders to the same piece of property, which is a concern not just for the United States and its forfeiture efforts, but it is for Wells Fargo as they express in their briefs.

[00:50:09] Speaker 06:
And the Greenbaum opinion expressed the number one concern in this area should be, not the number one concern, but a paramount concern in this area should be the risk of incompatible judgments to neutral holders of the property.

[00:50:22] Speaker 08:
Unless my colleagues have questions, you want to move on to Tria?

[00:50:26] Speaker 06:
Sure.

[00:50:27] Speaker 06:
So we talked a little bit about the license.

[00:50:31] Speaker 06:
My friends on the other side say it's a very limited conditional license.

[00:50:36] Speaker 06:
It is not.

[00:50:37] Speaker 06:
Section 1A of the license permits the United States to take any actions, ordinary, an incident to the forfeiture of the property here.

[00:50:45] Speaker 06:
That includes, in the United States' mind, its ability to seize the property and take actual physical possession of it.

[00:50:51] Speaker 06:
It hasn't, in order

[00:50:52] Speaker 06:
to have the creditors be able to vet their issues.

[00:50:55] Speaker 06:
Because once the United States takes possession of it, there is sovereign immunity that protects it from attachment.

[00:51:02] Speaker 06:
The 1B provision authorizes transactions on behalf of the bank.

[00:51:06] Speaker 06:
So the bank can voluntarily surrender the funds to the United States under 1B once there is a final or a forfeiture.

[00:51:13] Speaker 06:
It doesn't speak to what the United States can do through its seizure powers by going and seizing and taking custody of the funds and engaging in transactions

[00:51:22] Speaker 06:
ordinary an incident there to to promote the forfeiture of the funds bank has possession over the funds right now.

[00:51:30] Speaker 08:
That is correct.

[00:51:31] Speaker 08:
And the bank can't do anything with the funds.

[00:51:33] Speaker 08:
It can't can't give them to Iran.

[00:51:37] Speaker 08:
It can't give them to I forgot the name of the name of the entities in the commercial transaction.

[00:51:47] Speaker 08:
It can't even give them to the United States right now.

[00:51:50] Speaker 06:
It could give them well, the United States could take them, I would say, because the United States could season and take possession of them under its forfeiture.

[00:51:58] Speaker 08:
I mean, Wells Fargo thinks, gosh, this is this is a mess.

[00:52:02] Speaker 08:
We're racking up these legal fees.

[00:52:06] Speaker 08:
We just want to be out of this here.

[00:52:08] Speaker 08:
United States take the funds.

[00:52:10] Speaker 08:
I didn't think they could do that.

[00:52:12] Speaker 06:
I think if they were to express that to us, we would issue a seizure order and take the funds.

[00:52:18] Speaker 08:
I mean maybe but it sure just whether you think of this from the perspective of the bank or even Iran.

[00:52:27] Speaker 08:
I think what we think it's like on any colloquial understanding these funds are still frozen.

[00:52:32] Speaker 06:
Right, I think that we would take the same understanding as the Seventh and Fifth Circuits in RJ O'Brien and Holy Land, which is if once there is a permissible use for the funds, they are no longer frozen as used in the statute.

[00:52:45] Speaker 06:
And here, the permissible use is for the government.

[00:52:47] Speaker 05:
What's the affirmative reason for that, right?

[00:52:49] Speaker 05:
I think at least there's a seemingly compelling story that the fundamental nature of an IEPA order is to block assets of the designated foreign entities from those entities.

[00:53:03] Speaker 05:
And whatever else has happened, that's still true.

[00:53:06] Speaker 05:
And so I think that's why it feels a little bit odd to say these are unfrozen or unblocked when they're blocked from the very person the order is.

[00:53:15] Speaker 05:
The primary purpose of the order is to block them from.

[00:53:17] Speaker 06:
Sure.

[00:53:17] Speaker 06:
And I think my response to that would be best illustrated in a hypothetical that's not really a hypothetical because this occurred in another forfeiture case recently in district court.

[00:53:26] Speaker 06:
the government seized under IEPA and other authorities weapons that it identified as belonging to Iran and the Mediterranean.

[00:53:37] Speaker 06:
It then sought to forfeit those assets and at the same time obtained an OFAC warrant for the United States to transfer them to support fighters in the Ukraine.

[00:53:48] Speaker 06:
At no point in time

[00:53:50] Speaker 06:
simply because Iran couldn't get back their weapons, would we ever say that those are frozen once the government was able to transfer them to others for their use?

[00:53:58] Speaker 06:
And again, it's all government actors.

[00:54:01] Speaker 06:
It's all sovereign actions in that circumstance.

[00:54:04] Speaker 06:
But at the same time, I don't think that any TRIA creditor could have come in and said, I'm going to attach these munitions and claim them for myself, even though that the only permissible uses would have been sovereign purposes.

[00:54:16] Speaker 06:
And so I think you need to, that's where I think R.J.

[00:54:20] Speaker 06:
O'Brien and Holy Land really come from, is that yes, it is a sovereign act, but that doesn't mean it's frozen.

[00:54:25] Speaker 06:
That doesn't mean it's immobilized for no use whatsoever.

[00:54:28] Speaker 06:
It means that the government is the one that can use it.

[00:54:32] Speaker 06:
And, you know, I would say if

[00:54:35] Speaker 06:
The court finds persuasive the reasoning of the dissent of Judge Mannion in RJ O'Brien.

[00:54:41] Speaker 06:
Even his dissent talked about, well, when there's a general license,

[00:54:47] Speaker 06:
That certainly unfreezes the assets from the inception.

[00:54:50] Speaker 06:
Well, the government has general licenses under the OFAC regulations.

[00:54:55] Speaker 06:
They're mentioned in our brief, and they're found at 31 CFR 560.557 and several other places in the OFAC regulations.

[00:55:05] Speaker 06:
And they say that all transactions prohibited by this part

[00:55:08] Speaker 06:
that are for the conduct of the official business of the United States government by employees, grantees, contractor thereof are authorized.

[00:55:16] Speaker 06:
The government obtains its specific forfeiture licenses out of respect for OFAC's regulatory regime and to make sure there are no ongoing specific concerns with the specific piece of property to be identified.

[00:55:28] Speaker 06:
But the government also has a general license to carry out its official business with regard to black blocked assets here

[00:55:35] Speaker 06:
that official business includes seeking to forfeit the funds.

[00:55:40] Speaker 06:
And so if you, again, Judge Mannion created this specific license, general license distinction that I don't think necessarily applies, but if you think his logic is more persuasive than the majority in RJ O'Brien, then the creditors here also fail under that same logic.

[00:55:54] Speaker 07:
I asked Ms.

[00:55:55] Speaker 07:
Smith and Ms.

[00:55:56] Speaker 07:
Wagner whether, in trying to figure out whether these are blocked funds, we look to whether, look to the,

[00:56:05] Speaker 07:
whether they were blocked at the time that the there was a motion for rid of attachment or whether we look to whether they are blocked now what's your position.

[00:56:14] Speaker 06:
I think they have to be blocked throughout and I think that was the holding of R.J.

[00:56:18] Speaker 06:
O'Brien and it where it said something along the lines of and I don't have

[00:56:22] Speaker 06:
the quote in front of me, but there is no promise under TRIA that the government will continue to block assets of an actor that will make them available for attachment.

[00:56:33] Speaker 06:
And I think that plays out with a plainly simple hypothetical.

[00:56:37] Speaker 06:
If, for instance, the United States and Iran normalize relations, enter into a peace agreement, sanctions are dropped tomorrow.

[00:56:45] Speaker 06:
Unlikely, but say that happens.

[00:56:48] Speaker 06:
And OFAC unblocks all the assets.

[00:56:52] Speaker 06:
Congress intended in those circumstances for predators of Iran to continue to attach them under Tria.

[00:56:59] Speaker 06:
They may have other avenues.

[00:57:00] Speaker 06:
There may be other recompense.

[00:57:02] Speaker 06:
I know that this happened when sanctions were lifted against several African countries a couple of years ago.

[00:57:07] Speaker 06:
But I don't think in those circumstances

[00:57:10] Speaker 06:
the President unblocking assets that the United States collected against Iran when we were adversaries would continue to allow for their attachment under TRIA, necessarily, if those relations improve.

[00:57:24] Speaker 07:
And it's your position that they were blocked even before the license?

[00:57:30] Speaker 07:
Sorry, that they were unblocked even before the

[00:57:33] Speaker 06:
It is our position that they were unfrozen, to use the term of the statute, when the United States filed this forfeiture complaint and it had a license.

[00:57:43] Speaker 06:
It had a general license.

[00:57:44] Speaker 06:
It got the specific license after the Owens plaintiffs filed a writ of attachment.

[00:57:50] Speaker 07:
Certainly- How does it work if- I get that they were arrested on May 1st, the funds were.

[00:58:00] Speaker 07:
the license issued on July 23rd.

[00:58:03] Speaker 07:
Between May 1st and July 23rd, I think the U.S.

[00:58:11] Speaker 07:
wasn't allowed to do anything with those funds.

[00:58:15] Speaker 07:
Is that correct?

[00:58:16] Speaker 07:
It needed a license?

[00:58:18] Speaker 06:
I think what we would say is, yes, we needed to take possession and transact in those funds, to seize them, we would need a license.

[00:58:26] Speaker 07:
So it seems like until the license on July 23rd,

[00:58:31] Speaker 07:
they were frozen.

[00:58:32] Speaker 06:
I think that there is a stronger argument that they were frozen, but I think under Tria again, um, if they need to be frozen throughout the proceeding because they again to I understand that.

[00:58:44] Speaker 07:
So let's say that when the motion for a writ of attachment was filed by the Owens plaintiffs on May 22nd, that the court had just granted that on the same day.

[00:58:55] Speaker 07:
It seems like maybe the court would have been allowed to do that because at that point, the funds were still frozen because the license had not issued.

[00:59:06] Speaker 06:
I think there is a stronger argument there.

[00:59:08] Speaker 06:
The one caveat I will have is I need to go back and look at when the general license for the United States to conduct its official business was implemented in regulations.

[00:59:20] Speaker 07:
I think I understand what you're saying.

[00:59:25] Speaker 07:
And I guess it seems weird to me that the Owens plaintiff's ability to get this money depended on whether the district court granted their motion quickly or slowly.

[00:59:44] Speaker 07:
Seems like it should have been a motion, either the motion should have been granted or shouldn't have been granted.

[00:59:48] Speaker 07:
And the answer to that ought not depend on whether the district court moved fast.

[00:59:54] Speaker 06:
I think in this circumstance, that unique kind of factual wrinkle arises.

[01:00:00] Speaker 06:
And in most circumstances, and if you look at most of the cases that we have pursued, we have the license in hand at the time of the filing of the forfeiture case.

[01:00:07] Speaker 06:
So it presents a kind of a unique factual wrinkle here, given the timing.

[01:00:13] Speaker 06:
We have to decide.

[01:00:14] Speaker 06:
I understand, Your Honor.

[01:00:15] Speaker 06:
But I think that if you think that property blocked

[01:00:21] Speaker 06:
At the time the writ was issued and the timing is when the writ was issued, not that it needs to continue to be blocked for them to be able to collect on it under TRIA.

[01:00:31] Speaker 06:
That's your ruling that we look at it when the writ of attachment was issued.

[01:00:35] Speaker 07:
When the motion was made.

[01:00:37] Speaker 06:
When the motion was made or when the actual writ was issued, I don't think there's a difference in this case, because I think both occurred before July, at the end of July, when we received our license, at least for the- Motioned for a writ of attachment granted in this case?

[01:00:51] Speaker 07:
Yes, because then we moved to squash.

[01:00:53] Speaker 07:
Okay.

[01:00:53] Speaker 06:
Yeah.

[01:00:54] Speaker 06:
Okay.

[01:00:54] Speaker 06:
So it doesn't apply to 11th creditors, obviously, because their writ came much later, including their writs.

[01:01:00] Speaker 07:
We could rule for the Owens plaintiffs, rule against the 11th plaintiff, and it would not wreak chaos

[01:01:07] Speaker 06:
Well, so that would just be for the freeze question.

[01:01:11] Speaker 06:
That does not answer the notwithstanding question in the prior exclusive jurisdiction doctrine.

[01:01:16] Speaker 06:
And I would just point to the court.

[01:01:19] Speaker 06:
My friend on the other side has suggested that that's a very broad clause.

[01:01:23] Speaker 06:
The holdings from this court contradict that.

[01:01:26] Speaker 06:
Just earlier this year in Doe against Taliban, where the court was interpreting the scope of the notwithstanding clause under treaty, it said,

[01:01:33] Speaker 06:
that courts have consistently rejected an expansive reading of the text of the TRIA as displacing anything that stands in the way of a particular plaintiff's collecting.

[01:01:42] Speaker 06:
So that was the holding of a panel of this court just earlier this summer in Doe.

[01:01:47] Speaker 06:
And I think it rejects affirmatively that this is a broad notwithstanding clause that's meant to circumvent all laws, all sources of laws, not even provisions of laws, but including fundamental common law, jurisdictional concepts of interim jurisdiction.

[01:01:59] Speaker 06:
What if I think that, go ahead.

[01:02:04] Speaker 05:
I mean, it supersedes something, right?

[01:02:09] Speaker 05:
I mean, you've tacitly at least conceded that it, for example, supersedes 981C's exclusive jurisdiction provision that TRIA does.

[01:02:18] Speaker 05:
You have not argued.

[01:02:19] Speaker 06:
We have not argued that.

[01:02:20] Speaker 06:
We have not conceded that.

[01:02:21] Speaker 06:
But we have not argued that innocent.

[01:02:23] Speaker 05:
I mean, what would that argument even be?

[01:02:24] Speaker 05:
That would be that not even a conflicting statutory provision.

[01:02:28] Speaker 05:
Or would you say that does not conflict with anything specific in TRIA?

[01:02:32] Speaker 06:
I think we would adopt the arguments of the court in Holy Land, which said that the notwithstanding clause in trivia did not circumvent the the criminal forfeiture statute.

[01:02:43] Speaker 06:
and the provisions of the criminal forfeiture statute.

[01:02:45] Speaker 06:
It has several pages on that, arguing that the notwithstanding clause is meant to take down barriers to execution, kind of the shield that Judge Walker was talking about earlier, not the sword.

[01:02:55] Speaker 06:
It wasn't meant to take away the sword.

[01:02:57] Speaker 06:
And the provisions of the criminal forfeiture statute are the sword to parry and strike with, not the shield to deflect blows from the other side.

[01:03:09] Speaker 06:
I would also say that

[01:03:11] Speaker 06:
You know, the purpose of, and the provisions of the law that it clearly does seek to circumvent are the presidential waiver provisions of 28 USC 1610 F. And in fact, that's what the Supreme Court said was the purpose of the notwithstanding clause in the Lockheed.

[01:03:33] Speaker 06:
And it was also designed so that the tree accreditors don't need to obtain an OFAC license themselves to take possession of the property.

[01:03:43] Speaker 06:
So it has weight.

[01:03:45] Speaker 06:
It just doesn't have the weight to circumvent the government's forfeiture authorities.

[01:03:50] Speaker 06:
At least that's our argument here.

[01:03:52] Speaker 07:
The prior exclusive jurisdiction doctrine is some kind of federal common law.

[01:03:58] Speaker 07:
And federal statute would preempt federal common law.

[01:04:03] Speaker 07:
Right?

[01:04:04] Speaker 07:
It could.

[01:04:05] Speaker 07:
It could.

[01:04:06] Speaker 07:
Hear me out, because I think you'll like where I go.

[01:04:08] Speaker 07:
OK, good, good.

[01:04:11] Speaker 07:
981C has the exclusive jurisdiction provision.

[01:04:15] Speaker 07:
It seems like it speaks directly to what the federal common law might otherwise have spoken to if it weren't for 981C.

[01:04:23] Speaker 07:
In that sense, 981C displaces the prior exclusive jurisdiction common law doctrine.

[01:04:29] Speaker 07:
But it displaces it in a way that's pretty good for you.

[01:04:33] Speaker 07:
It displaces it in a way that says there's exclusive jurisdiction here and TRIA's notwithstanding clause doesn't conflict with that for the sword versus shield.

[01:04:48] Speaker 07:
What's wrong with that?

[01:04:49] Speaker 06:
I think that'd be a perfectly fine holding for this court to reach.

[01:04:53] Speaker 06:
I think we approached it a little bit differently in our briefs as saying that 981C didn't necessarily displace the prior exclusive jurisdiction doctrine because it itself uses the con work jurisdiction thereof, which to us brought forth the soil of MREM jurisdiction with the statutory enactment as opposed to seeking to displace it.

[01:05:14] Speaker 06:
clearly, which would be either in the text of the statute or by implication, the need to show an abrogation of common law.

[01:05:23] Speaker 06:
But if the court rules that taking away the shield is what the notwithstanding clause meant to do and not affect 981C, then the government would be happy with that outcome as well.

[01:05:40] Speaker 00:
Any other questions?

[01:05:40] Speaker 00:
OK.

[01:05:41] Speaker 00:
Thank you, Your Honors.

[01:05:48] Speaker 04:
Good morning, Your Honors.

[01:05:50] Speaker 04:
Good morning.

[01:05:51] Speaker 04:
Alex Lakatos for Wells Fargo.

[01:05:52] Speaker 04:
I think I can be fairly brief.

[01:05:56] Speaker 04:
Just obviously as a neutral stakeholder, we're looking for clear rules of the road and not to be whipsawed in between different courts with potentially inconsistent decisions.

[01:06:05] Speaker 04:
And I don't think anyone disputes that that's a sort of reasonable goal and also might foster some judicial economy.

[01:06:11] Speaker 04:
Um, respectfully, the resolution that I believe Judge Katz has suggested for the prior exclusive jurisdiction rule, which would be if you get everyone in front of one judge, that satisfies the concern would satisfy our concern.

[01:06:25] Speaker 04:
We wouldn't have inconsistent, uh, the risk of inconsistent judgments and the like.

[01:06:30] Speaker 04:
Um, without that, I think it's not solved because of South Dakota and New York.

[01:06:35] Speaker 04:
If you look at the New York, um,

[01:06:39] Speaker 04:
order that came out, it actually says Wells Fargo can't dispose of these assets without further order from the New York court.

[01:06:45] Speaker 04:
So we already are potentially ultimately facing some degree of conflict.

[01:06:53] Speaker 08:
We had from a problem that no one has put at issue here.

[01:06:59] Speaker 08:
I mean, right, the challengers here are just saying the prior exclusive jurisdiction doctrine doesn't apply if the actions are filed in the same court.

[01:07:10] Speaker 08:
That doesn't call into question whether it would apply for actions in South Dakota or New York or anywhere else other than DDC.

[01:07:20] Speaker 04:
Obviously, this court can only rule as to DDC.

[01:07:25] Speaker 04:
We're hoping that if this court does that, other courts will do the same and not create a circuit split.

[01:07:30] Speaker 04:
sort of like driving politely, you hope that others can walk.

[01:07:33] Speaker 08:
We can't find a district court in South Dakota.

[01:07:36] Speaker 04:
Right.

[01:07:37] Speaker 04:
Yeah, no, obviously.

[01:07:38] Speaker 04:
But we think that if this court makes the rule, then we have a better chance of taking that rule on the road and saying, look, this is how they dealt with it.

[01:07:45] Speaker 04:
It makes an awful lot of good sense.

[01:07:48] Speaker 04:
And that's why we'd like to see it happen here.

[01:07:51] Speaker 04:
Also, within this specific case, if this were to come up again,

[01:07:54] Speaker 04:
it would make it mandatory that the solution that happened here, which is let's get everything in front of one judge, is the rule of the road, as opposed to just, you know, fortunately it happened this time.

[01:08:08] Speaker 08:
Okay.

[01:08:08] Speaker 08:
Thanks.

[01:08:08] Speaker 08:
Anything else?

[01:08:09] Speaker 08:
You've got 40 seconds.

[01:08:11] Speaker 04:
No, no, no.

[01:08:13] Speaker 04:
I think you know where we're coming from.

[01:08:14] Speaker 04:
Thank you for considering it.

[01:08:17] Speaker 08:
Great.

[01:08:18] Speaker 08:
Rebuttal.

[01:08:19] Speaker 08:
Let's see.

[01:08:20] Speaker 08:
Ms.

[01:08:21] Speaker 08:
Smith.

[01:08:21] Speaker 02:
Thank you, Your Honor.

[01:08:23] Speaker 02:
Just to be clear, the forfeiture statute, not talking about the license, the statute, all the cases, including the district court below, everybody agrees, TREA preempts the statute by its own notwithstanding language, and the cases we cited in our brief from this circuit emphasize that.

[01:08:41] Speaker 02:
The cases and the OFEC regs

[01:08:44] Speaker 02:
require the government to have a license to litigate or to try to do anything with blocked assets.

[01:08:51] Speaker 02:
We're talking about a specific class of blocked assets under the terrorist regulations.

[01:08:58] Speaker 02:
To litigate, the government needs a license.

[01:09:00] Speaker 02:
And to take possession, the government needs a license.

[01:09:05] Speaker 02:
And Judge Garcia, to your point about Section B, if you're litigating but you can't take possession,

[01:09:13] Speaker 02:
then that's a condition of the license.

[01:09:16] Speaker 02:
So it's conditional.

[01:09:18] Speaker 02:
The only reason the victims don't need a license is because of TRIA.

[01:09:23] Speaker 02:
The notwithstanding language of TRIA has been held to mean we don't need a license because it supersedes any license requirements that continue to apply to the government.

[01:09:34] Speaker 02:
The license cannot frustrate the purpose of TRIA under the notwithstanding clause.

[01:09:40] Speaker 02:
And if it did, it would be void.

[01:09:42] Speaker 02:
This court has ruled, and we cite in our brief, that if an agency acts outside its power and authority, then that would be void.

[01:09:52] Speaker 02:
And so the license wouldn't be lawful.

[01:09:56] Speaker 02:
But the license does not do that.

[01:09:59] Speaker 02:
The license restricts itself to allowing the government to try to bring the forfeiture action.

[01:10:05] Speaker 02:
I want to address for one second the multiple forum question, because that lands squarely with me.

[01:10:11] Speaker 02:
To your point again, Judge Garcia, the victims don't know much about what's going on in the blocked asset world.

[01:10:19] Speaker 02:
It's possible to find out.

[01:10:20] Speaker 02:
We try to find out.

[01:10:21] Speaker 02:
It's difficult.

[01:10:22] Speaker 02:
Mostly we get it through the newspapers.

[01:10:25] Speaker 02:
But we filed in New York because we didn't know where the assets were.

[01:10:28] Speaker 02:
The government complaint didn't say where the assets were.

[01:10:31] Speaker 02:
and then we filed in South Dakota when we found out the assets were there as they still are.

[01:10:35] Speaker 02:
The reason for that, not issued before this court, but there is case law that in determining the priority among the victims, the law of the jurisdiction where the assets are being held is the mechanism if we get to that point.

[01:10:52] Speaker 02:
So I just didn't want you to think I was filing cases all over the country for fun.

[01:10:57] Speaker 02:
We immediately,

[01:10:59] Speaker 02:
said that we would stipulate to having the case in front of the DC court.

[01:11:03] Speaker 02:
It doesn't matter.

[01:11:04] Speaker 02:
A court should apply the law properly that applies here.

[01:11:09] Speaker 02:
If it's a judge in Washington or a judge in South Dakota, it doesn't matter.

[01:11:12] Speaker 02:
But ultimately, somebody's got to go to South Dakota because that's where the assets are being held.

[01:11:18] Speaker 02:
Thank you.

[01:11:18] Speaker 02:
Thank you, Your Honor.

[01:11:28] Speaker 03:
A few quick points in rebuttal, Your Honor.

[01:11:32] Speaker 03:
First, the government has conceded that the filing of the forfeiture action does not unblock the assets.

[01:11:39] Speaker 03:
I want to just quickly walk the court through that timeline.

[01:11:42] Speaker 03:
So on May 1st, as you said, the government filed this forfeiture action.

[01:11:46] Speaker 03:
On May 22nd, we moved for a writ of attachment.

[01:11:49] Speaker 03:
On May 25th, Judge Bates granted our motion.

[01:11:52] Speaker 03:
We then served those writs on Wells Fargo on June 10th.

[01:11:56] Speaker 03:
Later, on July 5th, the government for the first time requested a forfeiture license.

[01:12:02] Speaker 03:
which it didn't get until July 23rd.

[01:12:04] Speaker 03:
And I would submit that once we had our writs, TRIA's notwithstanding any other provision of law clause should have prevented any further operation of the forfeiture action that would bar our writs.

[01:12:15] Speaker 03:
Your honor suggested that notwithstanding provision could be read narrowly.

[01:12:19] Speaker 03:
But again, it says notwithstanding any other provision of law.

[01:12:23] Speaker 03:
It doesn't say notwithstanding foreign sovereign immunity.

[01:12:27] Speaker 03:
In NLRB versus Southwest General case, the Supreme Court, this is quoting Webster's, says that the word notwithstanding shows which provision prevails in the event of a clash, where there is a clash between our substantive rights, ability to seek rights under attachment, and the forfeiture statute.

[01:12:47] Speaker 03:
TRIA has to trump the forfeiture statute.

[01:12:54] Speaker 03:
is also, I think it's notable, says that it doesn't have possession of the funds.

[01:12:58] Speaker 03:
But now it's saying that it could have come in and seized them.

[01:13:02] Speaker 03:
But that is simply wrong under the text of the license.

[01:13:04] Speaker 03:
The government can't point to anything a license that authorizes it to go in and seize the funds.

[01:13:09] Speaker 03:
It would have to get another license.

[01:13:11] Speaker 03:
Rather, section 2B of the license says that an order for Wells Fargo to relinquish custody, there has to be a valid final order of forfeiture.

[01:13:20] Speaker 03:
We don't have a valid final order.

[01:13:22] Speaker 03:
So if the government were to seize the funds and Wells Fargo were to give custody of them to the government, Wells Fargo would then be running afoul of this license.

[01:13:30] Speaker 03:
The government would need another license to do that.

[01:13:32] Speaker 03:
It cannot possess the funds.

[01:13:34] Speaker 03:
And then there is, finally, as we were discussing, there is no clash here.

[01:13:40] Speaker 03:
There's no risk of chaos between all these different liens.

[01:13:45] Speaker 03:
They were all consolidated before Chief Judge Boasberg.

[01:13:48] Speaker 03:
The prior exclusive jurisdiction doctrine was supposed to apply between courts.

[01:13:53] Speaker 03:
If there was any concern about even different judges, that concern was fully satisfied.

[01:13:57] Speaker 03:
And so the court should rule in our favor.

[01:13:59] Speaker 03:
Thank you.

[01:14:00] Speaker 03:
Thank you, Your Honor.

[01:14:01] Speaker 00:
This is submitted.