Honickman v. Blom Bank SAL

(emphases added).

III. The District Court’s Decision

The district court granted BLOM Bank’s motion to dismiss for failure to state

a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”),

concluding that Plaintiffs’ complaint did not plausibly allege that BLOM Bank

aided and abetted Hamas’s attacks. See Honickman for Est. of Goldstein v. BLOM

Bank SAL,

432 F. Supp. 3d 253

, 271 (E.D.N.Y. 2020). In the court’s view, Plaintiffs

failed to allege the latter two elements of JASTA aiding-and-abetting liability:

“(1) that [BLOM Bank] was generally aware of its role as part of an overall illegal

or tortious activity at the time that it provided the assistance, and (2) that [BLOM

13 Bank] knowingly and substantially assisted the principal violation.”

Id. at 263

(alterations in original, internal quotation marks, and citation omitted).

As to general awareness, the court first found “Plaintiffs’ complaint does

not plausibly allege that BLOM [Bank] was generally aware of any connection

between the Three Customers and Hamas.”

Id. at 265

. It then concluded that

“even if Plaintiffs’ allegations plausibly alleged that BLOM [Bank] knew the Three

Customers were related to Hamas, ‘[e]vidence that [BLOM Bank] knowingly

provided banking services to [Hamas], without more, is insufficient to satisfy

JASTA’s scienter requirement.’ . . . Plaintiffs have not plausibly alleged that BLOM

[Bank] knew that by providing financial services to the Three Customers, it was

playing a role in Hamas’s violent activities.”

Id.

at 265–66 (second alteration in

original) (citation omitted). Regarding substantial assistance, the court analyzed

the six factors identified in Halberstam, discussed below, and ruled that “[t]he

complaint fails to establish that BLOM[] [Bank’s] provision of financial services to

the Three Customers amounted to providing ‘substantial assistance’ to Hamas.”

Id. at 268

Plaintiffs argue on appeal that: (1) the district court applied the wrong legal

standard in evaluating the sufficiency of their complaint; and (2) their complaint

14 plausibly alleges that BLOM Bank was generally aware of its role in Hamas’s

illegal activities and that BLOM Bank knowingly provided substantial assistance

to Hamas.

DISCUSSION

“We review de novo a district court’s dismissal of a complaint under Rule

12(b)(6), accepting all of the complaint’s [non-conclusory] factual allegations as

true and drawing all reasonable inferences in the plaintiffs’ favor.” Giunta v.

Dingman,

893 F.3d 73

, 78–79 (2d Cir. 2018). It is well established that:

[t]o survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal,

556 U.S. 662, 678

(2009) (internal quotation marks and citations

omitted).

15 I. The Standard for JASTA Aiding-and-Abetting Liability

The “Aiding Party Who Causes Injury” Element

The first element, that “the party whom the defendant aids must perform a

wrongful act that causes an injury,” Halberstam,

, is straightforward.

It is satisfied when the party whom the defendant directly or indirectly aided

performed the injury-causing act. BLOM Bank argues that Plaintiffs’ complaint

falls short because “the only parties whom BLOM [Bank] allegedly ‘aided’ are the

[Three] Customers,” and “JASTA limits aiding-and-abetting liability to those

circumstances in which a defendant actually ‘aided and abetted . . . the person who

committed’ the relevant ‘act of international terrorism.’” Appellee’s Br. at 63

(emphasis omitted) (quoting

18 U.S.C. § 2333

(d)(2)). We recently rejected the same

contention in Kaplan v. Lebanese Canadian Bank, SAL,

999 F.3d 842

(2d Cir. 2021),

holding that “[t]he language and purpose of JASTA are meant to allow an aiding-

and-abetting claim where the defendant’s acts aided and abetted the principal”

who committed the wrongful act “even where [the defendant’s] relevant

substantial assistance was given to an intermediary” of the principal.

Id. at 856

B. The “General Awareness” Element

The second (“general awareness”) and third (“substantial assistance”)

elements form the crux of most JASTA aiding-and-abetting cases. The “general

16 awareness” element requires the defendant to be “generally aware” of its role in

“an overall illegal or tortious activity at the time that [it] provides the assistance.” See

Halberstam,

(emphasis added). The defendant need not be generally

aware of its role in the specific act that caused the plaintiff’s injury; instead, it must

be generally aware of its role in an overall illegal activity from which the act that

caused the plaintiff’s injury was foreseeable. See

id. at 477, 488

Halberstam establishes this foreseeability principle. There, the D.C. Circuit

held that Linda Hamilton was civilly liable for aiding and abetting the murder of

Michael Halberstam during a burglary of his home by Bernard Welch, Hamilton’s

partner, even though she was unaware of Welch’s plan to burglarize or kill

Halberstam. See

id. at 474, 488

. Over the five years Hamilton and Welch lived

together, Welch acquired significant wealth by selling stolen goods that he

obtained through burglaries.

Id. at 475

. Although Hamilton was never present

during Welch’s burglaries and claimed she was unaware that they were occurring,

she performed the “secretarial work” for Welch’s illegal enterprise, such as typing

transmittal letters for sales of the stolen goods and keeping inventories of the

stolen goods that were sold.

17 The court concluded that the “sudden influx of great wealth” Hamilton and

Welch experienced, “the filtering of all transactions through Hamilton except

payouts for [the] goods” sold, and “Hamilton’s collusive and unsubstantiated

treatment of income and deductions on her tax forms . . . combine[d] to make the

district court’s inference that [Hamilton] knew [Welch] was engaged in illegal

activities acceptable, to say the least.”

Id. at 486

. Indeed, given the facts, “it

[would] def[y] credulity that Hamilton did not know that something illegal was

afoot.”

Hamilton’s “general awareness of her role in [Welch’s] continuing criminal

enterprise,”

id. at 488

, sufficed to establish her liability for aiding and abetting

Halberstam’s murder because the murder was a foreseeable consequence of Welch’s

illegal activity. As the court explained:

[U]nder an aiding-abetting theory, [the murder] was a natural and foreseeable consequence of the activity Hamilton helped Welch to undertake. It was not necessary that Hamilton knew specifically that Welch was committing burglaries. Rather, when she assisted him, it was enough that she knew he was involved in some type of personal property crime at night—whether as a fence, burglar, or armed robber made no difference—because violence and killing is a foreseeable risk in any of these enterprises.

(emphases added). 9 Foreseeability is thus central to the Halberstam framework,

and as a result, to JASTA aiding-and-abetting liability. 10

The district court, however, rejected the foreseeability principle, holding

that “it is not enough for Plaintiffs to plausibl[y] allege that BLOM [Bank] was

generally aware of [its] role in terrorist activities, from which terrorist attacks were

a natural and foreseeable consequence.” Honickman, 432 F. Supp. 3d at 264 (first

and third alterations in original) (emphasis, internal quotation marks, and citation

omitted). The court’s conclusion contravenes both Halberstam and Linde v. Arab

9 The Halberstam court extracted the foreseeability principle from American Family Mutual Insurance Co. v. Grim,

201 Kan. 340

(1968), in which a group of teenagers broke into a church at night looking for soft drinks in the kitchen. See Halberstam,

705 F.2d at 482

. Two of them failed to extinguish the torches they used to light their way to the attic, causing the church to catch on fire. See

id.

The defendant, one of the teenagers, did not know about the torches, did not enter the attic, and was not near the church when it caught on fire. See

id.

Still, he was found liable for damages caused by the fire because as part of the attempt to reach the church attic, “the need for adequate lighting could reasonably be anticipated,” making the use of torches and subsequent fire foreseeable. See

id. at 483

(citation omitted). 10 Halberstam did not specifically attach foreseeability to the general awareness or substantial assistance elements; it used foreseeability broadly for establishing the extent of liability under an aiding-and-abetting theory. See 705 F.2d at 482–83. As a result, it is more important that courts do not skip foreseeability altogether rather than apply it at a precise stage of the JASTA aiding-and-abetting analysis.

19 Bank, PLC,

882 F.3d 314

(2d Cir. 2018), one of the first cases in which we interpreted

aiding-and-abetting liability under JASTA. 11

Linde was brought before JASTA was enacted. The plaintiffs alleged that a

defendant bank was liable as a principal under the ATA for committing an act of

terrorism by “knowingly providing” material support to an FTO in the form of

“financial services.” Linde,

882 F.3d at 318

. At trial, the district court instructed

the jury that the “provision of material support to [an FTO in violation of a distinct

statute, 18 U.S.C. § 2339B] . . . necessarily proved the bank’s commission of an act

of international terrorism” under the ATA. Id. at 325. We held that this instruction

was erroneous because providing material support to an FTO does not qualify

under the definition of “an act of international terrorism.” Id. at 326. However,

the plaintiffs argued on appeal that the availability of aiding-and-abetting liability

under JASTA, enacted between the time of trial and the appeal, 12 made the error

in the jury instruction harmless. Id. at 328. Linde rejected their argument,

determining that:

11 We acknowledge that the district court’s decision came before our opinion in Kaplan clarified the import of our earlier JASTA aiding-and-abetting precedents which may have generated some ambiguity as to the proper standard. 12 We agreed that the plaintiffs were entitled to invoke JASTA on appeal because the act applies retroactively. See Linde,

882 F.3d at 328

20 aiding and abetting an act of international terrorism requires more than the provision of material support to a designated terrorist organization. Aiding and abetting requires the secondary actor to be ‘aware’ that, by assisting the principal, it is itself assuming a ‘role’ in terrorist activities. Halberstam[],

. Such awareness may not require proof of the specific intent demanded for criminal aiding and abetting culpability . . . . Nor does awareness require proof that Arab Bank [(the defendant)] knew of the specific attacks at issue when it provided financial services for Hamas. What the jury did have to find was that, in providing such services, the bank was ‘generally aware’ that it was thereby playing a ‘role’ in Hamas’s violent or life-endangering activities. Halberstam[],

. This is different from the mens rea required to establish material support in violation of 18 U.S.C. § 2339B, which requires only knowledge of the organization’s connection to terrorism, not intent to further its terrorist activities or awareness that one is playing a role in those activities. See Holder v. Humanitarian Law Project,

561 U.S. 1

, 16–17 . . . (2010).

Linde, 882 F.3d at 329–30 (some emphases omitted and others added) (footnotes

and internal citation omitted).

Here, the district court misread this passage from Linde to conclude that

applying the Halberstam foreseeability standard to the “general awareness”

element would contravene Linde by “replac[ing] the scienter for aiding-and-

abetting liability with the lower scienter required for [criminal] material support.”

Honickman, 432 F. Supp. 3d at 264. The court erred in equating the foreseeability

standard and the scienter required for criminal material support; the two are

21 distinct. In doing so, the court also implicitly perceived Linde as requiring more

than the Halberstam standard for general awareness, which we rejected in Kaplan.

“[N]othing in Linde repudiates the Halberstam standard that a defendant

may be liable for aiding and abetting an act of terrorism if it was generally aware

of its role in an ‘overall illegal activity’ from which an ‘act of international

terrorism’ was a foreseeable risk.” Kaplan,

. Nor could it, of course,

given Congress’s unambiguous assignment of Halberstam as the appropriate legal

framework for JASTA aiding-and-abetting liability. Linde’s holding that aiding-

and-abetting “requires more than the provision of material support to a terrorist

organization,”

882 F.3d at 329

, means only that allegations that a defendant

“knowingly provid[ed] material support to an FTO, without more, does not as a

matter of law satisfy the general awareness element.” Kaplan,

(emphasis added). That language “does not establish that [a defendant’s provision

of] material support to an FTO is never sufficient for [JASTA] aiding-and-abetting

liability.”

(emphasis added). Instead, “[w]hether a defendant’s material

support to an FTO suffices to establish general awareness is a fact-intensive

inquiry” depending on allegations that a defendant “was generally aware . . . that

22 it was playing a role in unlawful activities from which [terrorist] attacks were

foreseeable.”

at 860–61 (emphasis added).

On the other hand, we reject Plaintiffs’ attempt to equate the Halberstam

foreseeability standard with the “fungibility” theory in Holder v. Humanitarian Law

Project,

561 U.S. 1

(2010). Linde recognized that general awareness “is different

from the mens rea required to establish material support in violation of 18 U.S.C.

§ 2339B, which requires only knowledge of the organization’s connection to

terrorism . . . . See Holder[,] 561 U.S. [at] 16–17.” Linde, 882 F.3d at 329–30. In Holder,

a criminal material support case under § 2339B, the plaintiffs 13 knowingly

provided material support to FTOs but claimed they were “seek[ing] to facilitate

only the lawful, nonviolent purposes of those groups.” 561 U.S. at 7–8. The

Supreme Court determined that for the purpose of § 2339B, it did not matter that

the “[m]aterial support [was] meant to promote peaceable, lawful conduct”

because “[m]oney is fungible” and “there is reason to believe that foreign terrorist

organizations do not maintain legitimate financial firewalls between those funds

13 The plaintiffs were U.S. organizations and citizens who challenged the constitutionality of the criminal material support statute (18 U.S.C. § 2339B) and sought an injunction to prohibit its enforcement. See Holder, 561 U.S. at 10–11.

23 raised for civil, nonviolent activities, and those ultimately used to support violent,

terrorist operations.” Id. at 30–31 (internal quotation marks and citations omitted).

Plaintiffs urge us to adopt Holder’s “fungibility” rationale in assessing the

sufficiency of their complaint. They contend that Linde merely recognized that the

mens rea for aiding and abetting is “different” from criminal material support, not

that it is “higher.” Appellants’ Br. at 44. However, Linde determined that the facts

in Holder––adequate for criminal material support––fall short for the general

awareness element of JASTA aiding and abetting. 882 F.3d at 329–30. Indeed,

Linde could not have been clearer: aiding and abetting “requires more than the

provision of material support to a designated terrorist organization,”

882 F.3d at 329

. Plaintiffs’ fungibility argument would displace the aiding-and-abetting

standard with the standard for criminal material support by making “knowingly

providing material support to an FTO, without more” sufficient “as a matter of

law” for the general awareness element. See Kaplan,

. Not only

would this erase Linde’s distinction between general awareness and criminal

material support, but it would also evade Halberstam’s foreseeability standard. 14

14 Plaintiffs rely on Boim v. Holy Land Found. for Relief & Dev.,

549 F.3d 685

(7th Cir. 2008), a pre-JASTA case in which the Seventh Circuit held that the causation element of primary liability under the ATA,

18 U.S.C. § 2333

(a), is satisfied when the defendant knowingly

24 Accordingly, the relevant inquiry for the general awareness element is: did

Plaintiffs “plausibly allege[] the [Three] Customers were so closely intertwined

with [Hamas’s] violent terrorist activities that one can reasonably infer that [BLOM

Bank] was generally aware while it was providing banking services to those

entities that it was playing a role in unlawful activities from which [Hamas’s]

attacks were foreseeable[?]” 15 Kaplan, 999 F.3d at 860–61.

C. The “Substantial Assistance” Element

The last element for aiding-and-abetting liability requires that the defendant

“knowingly and substantially assist[ed] the principal violation.” Halberstam,

. As the analysis in Halberstam reveals, the “principal violation” must

be foreseeable from the illegal activity that the defendant assisted; knowing and

substantial assistance to the actual injury-causing act––here, Hamas’s attacks––is

unnecessary. See

id. at 488

donated money to a terrorist organization because “[a]nyone who knowingly contributes to the nonviolent wing of an organization that he knows to engage in terrorism is knowingly contributing to the organization's terrorist activities.”

549 F.3d at 698

. Boim is inapposite. It was decided before Congress assigned Halberstam as the appropriate framework for JASTA aiding-and-abetting liability claims and therefore lacks the requisite analysis. Moreover, any persuasive value it might have is insufficient to overcome the binding effects of Linde and Kaplan on us. 15 Contrary to BLOM Bank’s argument, the Three Customers do not themselves need to be “engaged in . . . violent or terrorist acts.” See Appellee’s Br. at 32–34.

25 The district court appeared to impose a higher standard on the “knowing”

prong of “knowingly and substantially” assisted than required, concluding that

“Plaintiffs’ complaint fails plausibly to allege that any assistance BLOM [Bank]

provided––even if substantial––would have been knowing.” Honickman, 432 F.

Supp. 3d at 268. The “knowledge component” is satisfied “[i]f the defendant

knowingly––and not innocently or inadvertently––gave assistance.” 16 Kaplan,

999 F.3d at 864

. For instance, Halberstam held that “the district court . . . justifiably

inferred that Hamilton assisted Welch with knowledge that he had engaged in

illegal acquisition of goods.”

705 F.2d at 488

. It did not require Hamilton to

“know” anything more about Welch’s unlawful activities than what she knew for

the general awareness element.

How much aid qualifies as substantial assistance? Halberstam identified six

factors:

(1) the nature of the act encouraged, (2) the amount of assistance given by defendant, (3) defendant’s presence or absence at the time

16 BLOM Bank argues in its post-argument letter brief that under Kaplan, “where a complaint alleges that the assistance was indirect, it must allege (among other things) that the defendant had ‘actual knowledge’ of the intermediary’s connection to the FTO.” Appellees’ Letter Br. at 14. Kaplan did not so hold; instead, it asserted “the actual knowledge component of the Halberstam standard requires that the defendant ‘know[ ]’ that it is providing ‘assistance,’ . . . whether directly to the FTO or indirectly through an intermediary.” 999 F.3d at 863–64 (alteration in original) (citation omitted).

26 of the tort, (4) defendant’s relation to the principal, (5) defendant’s state of mind, and (6) the period of defendant’s assistance.

Linde,

882 F.3d at 329

(citing Halberstam, 705 F.2d at 484–85). No factor is

dispositive; the weight accorded to each is determined on a case-by-case basis. See

Halberstam,

705 F.2d at 483

; see also Kaplan,

999 F.3d at 856

The district court misunderstood the first factor, “the nature of the act

encouraged,” to be a question of whether Plaintiffs plausibly alleged “that BLOM

[Bank] knowingly encouraged Hamas’[s] violent activities, such as those which

caused Plaintiffs’ injuries.” Honickman, 432 F. Supp. 3d at 268. However, the

“nature of the act involved dictates what aid might matter.” 17 See Halberstam,

705 F.2d at 484

(emphasis omitted). As a result, the factor requires assessing whether

the alleged aid (facilitating the transfer of millions of dollars to the Three

Customers) would be important to the nature of the injury-causing act (Hamas’s

terrorist attacks).

For the second factor, the “amount of assistance,” the district court held

“Plaintiffs make no non-conclusory assertions that any of the funds processed by

the Three Customers actually went to Hamas, or that BLOM [Bank], at the time it

17 For example, verbal encouragement of “physical acts of violence” may be important to a principal’s commission of battery. See Halberstam,

705 F.2d at 484

27 provided banking services to the Three Customers, was aware or intended that

Hamas would receive the corresponding funds.” Honickman, 432 F. Supp. 3d at

268. However, Plaintiffs did not need to allege the funds “actually went to

Hamas.” Factual allegations that permit a reasonable inference that the defendant

recognized the money it transferred to its customers would be received by the FTO

would suffice. See Kaplan,

999 F.3d at 866

. In other words, if a plaintiff plausibly

alleges the general awareness element, she does not need to also allege the FTO

actually received the funds. Instead, the inquiry should focus on the amount and

type of aid the defendant provided. See Halberstam,

705 F.2d at 488

Lastly, the fourth factor, the “defendant’s relation to the principal,” is useful

for determining the defendant’s capacity to assist. See

id. at 484

. The district court

erroneously construed this Court’s finding in Siegel v. HSBC N. Am. Holdings, Inc.,

933 F.3d 217

(2d Cir. 2019), that “the plaintiffs d[id] not plead any non-conclusory

allegations that [the defendant-bank] had any relationship with [the FTO]” to

mean that Plaintiffs must plead a direct relationship between BLOM Bank and

Hamas.

Id. at 225

; see Honickman, 432 F. Supp. 3d at 269. In Siegel, the defendant-

bank’s “relation to the principal” was several steps removed: it allegedly had a

commercial relationship with another bank that was linked to various terrorist

28 organizations including the FTO that caused the plaintiffs’ injuries. See 933 F.3d at

220–21. Although the relationship between the defendant and the FTO should not

be so attenuated as in Siegel, a direct relationship between the defendant and the

FTO is not required to satisfy this factor.

II. The Sufficiency of Plaintiffs’ Complaint

For Plaintiffs’ JASTA aiding-and-abetting claim to be viable, the complaint

must plausibly allege all three elements of the Halberstam standard for aiding-and-

abetting liability.

The first element, that the party whom the defendant aided performed the

injury-causing act, merits little attention. Plaintiffs plausibly allege that the party

whom BLOM Bank aided (indirectly), Hamas, committed attacks causing

Plaintiffs’ injuries. For the second element, general awareness, the complaint must

plausibly allege: (1) as a threshold requirement, that BLOM Bank was aware of the

Three Customers’ connections with Hamas before the relevant attacks; and (2) the

Three Customers were so closely intertwined with Hamas’s violent terrorist

activities that one can reasonably infer BLOM Bank was generally aware of its role

in unlawful activities from which the attacks were foreseeable while it was

providing financial services to the Three Customers. See Kaplan,

29 For the final element of substantial assistance, the complaint must contain

sufficient factual allegations relating to the six factors identified above.

We conclude that Plaintiffs’ aiding-and-abetting claim fails because the

allegations do not support an inference that BLOM Bank was aware of the Three

Customers’ ties with Hamas prior to the relevant attacks, thereby undermining the

second element of general awareness. In assessing this element, the district court

found that the complaint’s references to media articles and publications on the

Three Customers’ connection to Hamas were insufficient because “Plaintiffs

fail[ed] plausibly to allege that BLOM [Bank] . . . actually knew or should have

known of any of the cited sources.” Honickman, 432 F. Supp. 3d at 265. However,

as we explained in Kaplan, Plaintiffs did not need to allege that BLOM Bank knew

or should have known of the public sources at the pleading stage. See

999 F.3d at 865

. Such a requirement at this juncture would be too exacting.

Nevertheless, the public sources cited in the complaint do not plausibly

support an inference that BLOM Bank had the requisite general awareness at the

time that it provided banking services to the Three Customers. See Halberstam,

(“[T]he defendant must be generally aware of [its] role . . . at the time

that [it] provides the assistance.”) (emphasis added). One of the news articles on

30 Sanabil referenced in the complaint was dated August 27, 2004, more than a year

after the last relevant attack, and reported only that Sanabil sponsored Palestinian

families and spent money on orphans. The Lebanese press’s coverage of Sanabil’s

center in Sidon closing due to “its links to [Hamas]” is undated. J.A. 159. The

complaint lacks any allegations that at the time of the interviews in which al-

Qaradawi––who chaired Union of Good––praised martyrdom and criticized the

United States’ designation of Hamas, it was public knowledge that al-Qaradawi

chaired Union of Good. 18 Indeed, the Treasury Department’s press release,

announcing the designation of Sanabil and similar organizations as SDGTs only

after the final attack at issue, describes these organizations as using

“humanitarian[] . . . purposes as a cover for acts that support [Hamas],” which the

Treasury Department unveiled only after developing “credible evidence” in an

investigation. J.A. 147 (emphasis added). That organizations like the Three

Customers maintained a “cover” in public undermines the plausibility of

18Plaintiffs argue that “the publicly available evidence [in the complaint] was largely available before or during the relevant period or discussed facts that were previously knowable.” Appellants’ Br. at 39, n.11. However, “publicly available” evidence is not the same as public sources such as media articles. The latter, depending on their substance, plausibly suggest a defendant’s knowledge which can be confirmed during discovery, whereas the former requires the implausible inference that the defendant was aware of those facts even before the news media.

31 Plaintiffs’ theory that BLOM Bank understood these organizations’ true nature

and activities from the public record at the time.

The limited public sources Plaintiffs cite pale in comparison to the detailed,

numerous sources that sufficed in Kaplan. See

999 F.3d at 864

. The Kaplan

complaint alleged Hizbollah made public statements identifying the defendant-

bank’s customers as “integral parts of Hizbollah” prior to the relevant attacks

which were “specific as to the status of the speaker,” “the circumstances in which

the statements were made,” and “the other specific media in which they were

made,” including Hizbollah’s own websites.