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September 8, 2011 6:50 PM

The Global Lawyer: The Kingdom and the 9/11 Plaintiffs

Posted by Ed Shanahan

By Michael D. Goldhaber

In 2002 an unlikely coalition of victims, mostly represented by Motley Rice, and property insurers, mostly represented by Cozen O'Connor, sued Saudi Arabia and a clutch of Saudi princes and charities that allegedly funded al Qaeda. The suits were both praised and reviled as "the privatization of foreign policy." Stephen Cozen, who offers the more cautious estimate of the two lead lawyers, puts the stakes as $150–250 billion, including interest and treble damages. The New York Times quoted Ronald Motley as saying: "I loooove to pick on the Saudis.”

The King of Saudi Arabia most likely heaved a huge sigh of relief in June 2009, when the U.S. Supreme Court declined to review an August 2008 ruling by the U.S. Court of Appeals for the Second Circuit dismissing the plaintiffs claims against the Kingdom, its princes, and the one prominent charity that was shrewd enough to claim sovereign immunity. But the plaintiffs, determined to hold private sponsors of terror accountable, refused to walk away.

Cozen and his allies see four paths forward. First, on Thursday Cozen O'Connor filed a new 9/11 suit against the Kingdom, along with select princes and charities, in the name of a new plaintiff: an insurance syndicate that covered more than $215 million of the $1.2 billion settlement struck last year with airlines and airport security firms. (The Second Circuit approved the settlement in April.) The plaintiffs lawyers' most interesting strategic choice was to file their 154-page complaint in the Western District of Pennsylvania, where the fourth hijacked jetliner crashed. If that choice sticks, it avoids both unfriendly Second Circuit law and a seemingly unfriendly judge, Manhattan federal district court judge George Daniels, who presides over the consolidated 9/11 funding litigation.

Second, Cozen said that Sen. Charles Schumer will soon reintroduce a bill, known as the Justice Against Sponsors of Terrorism Act, that would effectively overrule the Second Circuit's obstructive rulings on sovereign immunity and personal jurisdiction and allow a new action to be filed against Saudi Arabia. Cozen O'Connor's lobbying materials make clear that its preferred endgame is to force Saudi Arabia into a massive executive agreement, on the model of Libya's 2008 settlement of terror claims.

Third, the plaintiffs would like the Second Circuit to reconsider its own holdings on sovereign immunity and personal jurisdiction, or, if needed, to see the Supreme Court finally review them. In July the district court finally certified for appeal the cases of another 75 of the original 9/11 defendants. Although they were dismissed from the case between 2005 and 2010, their cases serve up the same issues as the dismissal of the Kingdom and its princes (whose appeals have run their course). The plaintiffs have brought in Sidley Austin appellate star Carter Phillips to argue before the Second Circuit, probably next spring. They view the appellate court's precedent as highly vulnerable.

In the Second Circuit's August 2008 ruling, Chief Judge Dennis Jacobs concluded, in language that the plaintiffs call blatantly political, that the law does not "delegate to the victims, their counsel or the courts the responsibility of the executive branch to make America's foreign policy response to acts of terrorism." He cited three rationales. The first, that U.S. sovereign immunity extends to foreign officials, was clearly repudiated by the Supreme Court in Samantar v. Yousef last year. Plaintiffs argue that the second rationale, that personal jurisdiction may be asserted only over defendants that actually directed terror, is undermined by Holder v. Humanitarian Law Project, which deferred heavily to the other branches' views on the financing of terror. As for Judge Jacobs's third rationale, that the exception to sovereign immunity for state sponsors of terror implies a restriction of the exception for domestic torts, plaintiffs just call it plain dumb and cite the solicitor general in support.

Finally, the plaintiffs are moving forward with discovery against the fourteen original 9/11 defendants that have survived motions to dismiss, with the aim of a trial in 2012. Among those defendants are the Saudi charities Muslim World League and International Islamic Relief Organization, which asserted as an affirmative defense that they are instrumentalities of Saudi Arabia. These charities have not altered their position, but the Kingdom denies any connection. Perhaps as a result, the charities have chosen not to assert sovereign immunity. Steve Cozen argues that he will not only collect billions directly against the charities, but he will use them, as well as the World Assembly of Muslim Youth and the al-Haraiman Islamic Foundations, to reach Saudi Arabia itself.

Martin McMahon, who represents the Muslim World League and IIRO, is highly skeptical. As he sees it: "The plaintiffs' strategy was to get the princes. They took it to the Second Circuit and lost totally. Now they're convinced that if the charities take a hit, the Kingdom will step in and pay. That's just not going to happen. I think we're going to see a crumbling of the 9/11 Case” On the eve of the 9/11 anniversary, the would-be pioneers of plaintiffs' diplomacy see a different narrative arc. "Civil justice has been perverted for eight years by the inexplicable delays of two district judges and an unsupportable Second Circuit decision," Cozen said. "The 9/11 victims want justice." And he still believes they will get it.

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