No. 10‐1306‐cv Licci ex rel. Licci v. Lebanese Canadian Bank, SAL
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2010
(Argued: February 25, 2011 Decided: October 18, 2013)
Docket No. 10‐1306‐cv
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
YAAKOV LICCI, a minor, by his father and natural guardian, ELIHAV LICCI, and by his mother and natural guardian, YEHUDIT LICCI, et al.,
Plaintiffs‐Appellants‐Movants‐Petitioners,
‐ v ‐
LEBANESE CANADIAN BANK, SAL; AMERICAN EXPRESS BANK LTD.,
Defendants‐Appellees‐Respondents‐Respondents.
Before: KATZMANN, Chief Judge, and KEARSE and SACK, Circuit Judges.
The plaintiffs have made a motion for the Court to permit them to
file a petition for rehearing at this time despite the fact that a judgment had yet
1 to issue in this appeal. We grant the motion only insofar as it regards the filing
of a petition for panel rehearing and deny the petition.
Appearances: ROBERT J. TOLCHIN (Meir Katz, of counsel), The Berkman Law Office, LLC, Brooklyn, NY, for Plaintiffs‐Appellants‐Movants‐Petitioners.
MARK P. LADNER, Morrison & Foerster LLP, New York, NY, for Defendant‐Appellee‐ Respondent‐Respondent American Express Bank Ltd.
PER CURIAM:
On March 5, 2012, this Court filed an opinion affirming the judgment of
the United States District Court for the Southern District of New York (George
B. Daniels, Judge) insofar as it dismissed that portion of the complaint that
asserted claims against the defendant American Express Bank Ltd. (ʺAmExʺ).1
Licci ex rel. Licci v. Lebanese Can. Bank, SAL and Am. Express Bank, Ltd., 672 F.3d
1 The Court simultaneously certified a question to the New York Court of Appeals with respect to the district courtʹs in personam jurisdiction over the co‐ defendant Lebanese Canadian Bank, SAL. Licci ex rel. Licci v. Lebanese Can. Bank, SAL, 673 F.3d 50 (2d Cir. 2012). On November 20, 2012, the New York Court of Appeals responded to the certification, Licci v. Lebanese Can. Bank, SAL, 20 N.Y.3d 327, 960 N.Y.S.2d 695, 984 N.E.2d 893 (2012), and the question of jurisdiction over that co‐defendant remains pending before this court. This opinion does not deal with that portion of these proceedings regarding jurisdiction over the Lebanese Canadian Bank.
2 155 (2d Cir. 2012) (ʺAmExʺ). On January 7, 2013, the appellants filed what they
styled as a motion for leave to file a petition for rehearing and rehearing en banc
prior to entry of judgment against them. They appended to the motion a copy
of the petition they sought to file.
On September 18, 2013, the appellants filed a letter pursuant to Federal
Rule of Civil Procedure 28(j) calling to our attention a decision by the New York
Supreme Court, Appellate Division, First Department, in Elmaliach v. Bank of
China Ltd., __A.D.2d__, 971 N.Y.S.2d 504 (1st Depʹt 2013) (ʺBank of Chinaʺ). At
our request, AmEx responded to the 28(j) letter on September 27, 2013, and the
appellants responded to that letter on October 16, 2013.
We now grant the appellantsʹ motion for leave to file a petition for panel
rehearing, even though a judgment in this appeal had yet to issue, and we deny
that petition.
BACKGROUND
The facts and history of this litigation insofar as it involves the defendant
AmEx are set forth in our opinion in AmEx, 672 F.3d at 156, which in turn refers
to a more complete version of the facts contained in Licci ex rel. Licci v. Lebanese
Can. Bank, SAL, 673 F.3d 50 (2d Cir. 2012). We wrote in AmEx:
3 This case concerns a series of rocket attacks launched by Hizballah, a Lebanese terrorist organization, at targets in northern Israel in July and August 2006. The plaintiffs are American, Canadian, and Israeli civilians who were injured, or whose family members were injured or killed, during the rocket attacks. They allege that [Lebanese Canadian Bank (ʺLCBʺ)] knowingly maintained bank accounts for an alleged Hizballah affiliate, the Shahid (Martyrs) Foundation (ʺShahidʺ), and carried out dozens of international wire transfers on Shahidʹs behalf. These wire transfers, which totaled several million dollars, were conducted using LCBʹs correspondent bank account at AmEx in New York. The plaintiffs assert that AmEx, by facilitating these wire transfers on behalf of LCB and Shahid, breached a legal duty of care to the plaintiffs and thereby caused the plaintiffsʹ injuries.
AmEx, 672 F.3d at 156. The parties disagreed as to whether New York or Israeli
law governs the plaintiffsʹ claims against AmEx. Assuming there is an actual
conflict between New York and Israeli law, we applied New Yorkʹs
interest‐analysis test to determine which law should apply and concluded that
New York has the greatest interest in this litigation. All of the challenged conduct undertaken by AmEx occurred in New York, where AmEx is headquartered and where AmEx administers its correspondent banking services. Although the plaintiffsʹ injuries occurred in Israel, and Israel is also the plaintiffsʹ domicile, those factors do not govern where, as here, the conflict pertains to a conduct‐regulating rule.
Id. at 158. We further concluded that
New York, not Israel, has the stronger interest in regulating the conduct of New York‐based banks operating in New York. See, e.g., [Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189, 198, 491
4 N.Y.S.2d 90, 96, 480 N.E.2d 679, 684‐85 (1985))] (noting the ʺlocus jurisdictionʹs interests in protecting the reasonable expectations of the parties who relied on it to govern their primary conductʺ). Accordingly, even assuming that the district court was mistaken in deciding that there was no actual conflict between New York law and Israeli law, . . . a choice‐of‐law analysis would nonetheless require application of New York law to the plaintiffsʹ negligence claim against AmEx.
Id. The parties agreed (as do we) that under New York law, AmEx has no
liability to the appellants for the harm to them that is the subject of this action.
See Lerner v. Fleet Bank, N.A., 459 F.3d 273, 286 (2d Cir. 2006). We therefore
decided that the case against Amex must be dismissed. We entered no
judgment, however, because the appeal regarding the district courtʹs in
personam jurisdiction over the other defendant, Lebanese Canadian Bank, SAL,
remains pending following our certifying and the New York Court of Appeals
responding to questions vital to that issue.
DISCUSSION
The appellants now principally argue that under New York law as
recently expressed by the Appellate Division, First Department, in Bank of
China, we must withdraw our AmEx opinion applying New York law and
5 conclude instead that Israeli law governs their claims against AmEx. We
decline to do so.
I. The Binding Nature of the Bank of China Decision
We are bound, of course, by the law of New York as interpreted by the
New York Court of Appeals. See Commʹr of Internal Revenue v. Estate of Bosch,
387 U.S. 456, 464 (1967); 28 U.S.C. § 1652. We ʺconsider the language of the state
intermediate appellate courts to be helpful indicators of how the stateʹs highest
court would rule.ʺ DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005).
ʺAlthough we are not strictly bound by state intermediate appellate courts,ʺ we
will look to their decisions unless ʺconvinced by other persuasive data that the
highest court of the state would decide otherwise.ʺ Id. (quoting West v. Am. Tel.
& Tel. Co., 311 U.S. 223, 237 (1940)); see also Estate of Bosch, 387 U.S. at 465
(ʺ[E]ven in diversity cases [the Supreme] Court has . . . held that while the
decrees of lower state courts should be attributed some weight . . . the decision
is not controlling . . . where the highest court of the State has not spoken on the
point.ʺ) (second and third ellipses in original; citation, internal quotation marks,
and some alterations omitted).
6 We conclude that we are not bound by the First Departmentʹs decision in
Bank of China. The New York Court of Appeals has already prescribed the
choice‐of‐law rules applicable to the case at bar in Schultz v. Boy Scouts of
America, Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985). Bank of
China is thus not a statement of an unsettled or ambiguous rule, but rather an
application of a previously established rule. Because we are persuaded that it is
a mistaken application, as explained below, we decline to follow it.
II. The Persuasiveness of the Bank of China Opinion
The crucial New York Court of Appeals decision relevant to this
proceeding, and the one on which we principally relied in reaching our earlier
conclusion, explicitly establishes an interest‐analysis approach: ʺThe law of the
jurisdiction having the greatest interest in the litigation will be applied . . . .ʺ
Schultz, 65 N.Y.2d at 197, 491 N.Y.S.2d at 95, 480 N.E.2d at 684 (internal
quotation marks and alterations omitted). As we pointed out in AmEx, interest
analysis is a ʺflexible approach intended to give controlling effect to the law of
the jurisdiction which, because of its relationship or contact with the occurrence
or the parties, has the greatest concern with the specific issue raised in the
litigation.ʺ AmEx, 672 F.3d at 157‐58 (quoting Cooney v. Osgood Mach., Inc., 81
7 N.Y.2d 66, 72, 595 N.Y.S.2d 919, 922, 612 N.E.2d 277, 280 (1993) (intermediate
citation to Second Circuit authority omitted)).
Under Schultz, the interest analysis is applied differently depending on
whether the rules in question are conduct‐regulating rules that ʺpeople use as a
guide to governing their primary conduct,ʺ or loss‐allocating rules that
ʺprohibit, assign, or limit liability after the tort occurs.ʺ AmEx, 672 F.3d at 158
(internal quotation marks omitted).
All parties and we agree that the law with which we are dealing is
ʺconduct regulating.ʺ And as we further observed in AmEx, ʺ[i]f conflicting
conduct‐regulating laws are at issue, the law of the jurisdiction where the
[allegedly tortious acts] occurred will generally apply because that jurisdiction
has the greatest interest in regulating behavior within its borders.ʺ AmEx, 672
F.3d at 158 (quoting Cooney, 81 N.Y.2d at 72, 595 N.Y.S.2d at 922, 612 N.E.2d at
280) (intermediate citation to Second Circuit authority omitted).2 As we
2 For additional cases in this Circuit applying the law of the jurisdiction where the allegedly tortious act occurred when conduct‐regulating rules conflict, see AroChem Int’l, Inc. v. Buirkle, 968 F.2d 266, 270‐71 (2d Cir. 1992); LaSala v. Lloyds TSB Bank, PLC, 514 F. Supp. 2d 447, 465‐66 (S.D.N.Y. 2007); HSA Residential Mortg. Servs. of Tex. v. Casuccio, 350 F. Supp. 2d 352, 365‐66 (E.D.N.Y. 2003); Cromer Fin. Ltd. v. Berger, 137 F. Supp. 2d 452, 492‐93 (S.D.N.Y. 2001); Sussman v. Bank of Israel, 801 F. Supp. 1068, 1075 (S.D.N.Y. 1992), aff’d, 990 F.2d 71 (2d Cir. 1993).
8 concluded in AmEx, ʺNew York, not Israel, has the stronger interest in
regulating the conduct of New York‐based banks operating in New York.ʺ Id.
It seems to be without question that the conduct of AmEx that appellants
allege was tortious occurred in New York. New York has the greatest interest
in regulating conduct within its borders, and consequently its law applies.
We think that in Bank of China, the Appellate Division misapplied the
Schultz rule by failing to give effect to the distinction between the two different
kinds of tort‐law rules for choice‐of‐law purposes. It cited Schultz for the
proposition that ʺ[w]here a defendantʹs negligent conduct occurs in one
jurisdiction and the plaintiff suffers injuries in another, ʹthe place of the wrong
is considered to be the place where the last event necessary to make the actor
liable occurred,ʹ that is, ʹwhere the plaintiffsʹ injuries occurred.ʹʺ Bank of China,
__A.D.2d__, 971 N.Y.S.2d at 514 (quoting Schultz, 65 N.Y.2d at 195, 491 N.Y.S.2d
at 94, 480 N.E.2d at 683). Put simply, Bank of China read Schultz to require a
ʺplace of injuryʺ rule.
But Schultzʹs reference to the ʺplace of injuryʺ rule occurred in the context
of discussing the ʺtraditional rule[]ʺ of lex loci delicti, which equates the ʺplace of
the wrongʺ with the place of the injury. Schultz, 65 N.Y.2d at 195, 491 N.Y.S.2d
9 at 93‐94, 480 N.E.2d at 682‐83. And, as the court went on to point out, it has
ʺrefused to invariably applyʺ that rule ʺto determine the availability of relief for
commission of a tort.ʺ Id. at 196, 491 N.Y.S.2d at 94, 480 N.E.2d at 683. Schultz
was explicit: ʺ[W]hen the conflicting rules involve the appropriate standards of
conduct, rules of the road, for example, the law of the place of the tort will
usually have a predominant, if not exclusive, concern.ʺ Id. at 198, 491 N.Y.S.2d
at 95, 480 N.E.2d at 684 (internal quotation marks omitted).3
The New York Court of Appeals has not been presented with this precise
issue, i.e., a conflict between the conduct‐regulating rules of the place where the
injury occurred and the conduct‐regulating rules of the place where the conduct
of the defendant in question occurred and whose laws did not impose on that
defendant a duty of care toward the plaintiffs. Several decisions of the
Appellate Division appear to have read Schultz to stand for the proposition that,
when there is a conflict between the conduct‐regulating rules of the place of the
3 The court went on to explain that the reason for this rule is that, in such cases, ʺthe locus jurisdictionʹs interests in protecting the reasonable expectations of the parties who relied on it to govern their primary conduct and in the admonitory effect that applying its law will have on similar conduct in the future assume critical importance and outweigh any interests of the common‐domicile jurisdiction.ʺ Schultz, 65 N.Y.2d at 198, 491 N.Y.S.2d at 96, 480 N.E.2d at 684‐85.
10 conduct and those of the place of the injury, it is the latter that generally apply.
See Bank of China, ‐‐‐ A.D.3d ‐‐‐, 971 N.Y.S.2d 504 (1st Depʹt 2013); Devore v.
Pfizer Inc., 58 A.D.3d 138, 141, 867 N.Y.S.2d 425, 427‐28 (1st Depʹt 2008), leave
denied, 12 N.Y.3d 703, 876 N.Y.S.2d 704 (2009);4 Ackerman v. Price Waterhouse, 252
A.D.2d 179, 192‐93, 683 N.Y.S.2d 179, 189 (1st Depʹt 1998). Respectfully, we do
not agree with that interpretation. Although Schultz involved injuries some of
which were experienced in a state different from the states in which the
institutional tortfeasorsʹ conduct (the allegedly negligent hiring, supervision,
and retention of a child‐molesting employee) occurred, the state in which each
defendant employerʹs conduct occurred undeniably imposed a duty of care on
4 The degree to which Devore rests on this ground is unclear to us. In Devore, the First Department set forth accurately the Schultz rule that ʺ[w]hen the purpose of the statute is to regulate conduct, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders.ʺ 58 A.D.3d at 141, 867 N.Y.S.2d at 427‐28 (internal quotation marks omitted). While the Devore panel went on to state that the place of the tort is ʺgenerally defined as the place of the injury,ʺ id. at 141, 867 N.Y.S.2d at 428 (citing Schultz, 65 N.Y.2d at 195, 491 N.Y.S.2d at 94, 480 N.E.2d at 683 (discussing the ʺtraditional rule[]ʺ of lex loci delicti)), the court apparently did not ultimately rely on a place‐of‐injury analysis but rather on case law that under ʺa true application of the interest analysis approach, the law of the forum in which the products are sold should govern.” Devore, 58 A.D.3d at 142, 867 N.Y.S.2d at 428‐29 (quoting Doe v. Hyland Therapeutics Div., 807 F. Supp. 1117, 1130 n.16 (S.D.N.Y. 1992)) (internal quotation marks omitted).
11 that defendant, and the only question was whether to apply a loss‐allocation
doctrine (charitable immunity) that was recognized by only one of the states in
which injury occurred.
The New York Court of Appeals has consistently explained that, for
conduct‐regulating rules, ʺthe law of the jurisdiction where the [alleged] tort
occurred will generally apply because that jurisdiction has the greatest interest
in regulating behavior within its borders.ʺ Cooney, 81 N.Y.2d at 72, 595 N.Y.S.2d
at 922, 612 N.E.2d at 280; see also In re Allstate Ins. Co. (Stolarz), 81 N.Y.2d 219,
225, 597 N.Y.S.2d 904, 907, 613 N.E.2d 936, 939 (1993) (ʺStolarzʺ). This is because
ʺ[w]here the defendantʹs exercise of due care . . . is in issue, the jurisdiction in
which the allegedly wrongful conduct occurred will usually have a
predominant, if not exclusive, concern.ʺ Babcock v. Jackson, 12 N.Y.2d 473, 483,
240 N.Y.S.2d 743, 750, 191 N.E.2d 279, 284 (1963). In the ordinary tort case,
ʺboth the wrong and the injury t[ake] placeʺ in the same jurisdiction. Id. at 477
n.2, 240 N.Y.S.2d at 746 n.2, 191 N.E.2d at 280 n.2. But where they do not, it is
the place of the allegedly wrongful conduct that generally has superior
ʺinterests in protecting the reasonable expectations of the parties who relied on
[the laws of that place] to govern their primary conduct and in the admonitory
12 effect that applying its law will have on similar conduct in the future.ʺ Schultz,
65 N.Y.2d at 198, 491 N.Y.S.2d at 96, 480 N.E.2d at 684‐85.
We recognize decisions of the Appellate Division as ʺa basis for
ascertaining state law . . . unless [we are] convinced by other persuasive data
that the highest court of the state would decide otherwise.ʺ DiBella, 403 F.3d at
112 (internal quotation marks omitted). To the extent that our decision in this
case differs from that of Bank of China or other Appellate Division cases, it is
because we are persuaded by the consistent rationale of the New York Court of
Appeals as it has applied interest analysis. Here, we conclude that it is New
York, and not Israel, that ʺhas an overriding interest in regulatingʺ the conduct
of banks operating ʺwithin its borders,ʺ Stolarz, 81 N.Y.2d at 225, 597 N.Y.S.2d at
907, 613 N.E.2d at 939. Therefore, we adhere to our conclusion that the law
applicable to plaintiffsʹ negligence claims against AmEx is that of New York.
We therefore reject the view of Bank of China that the law of the place of
injury ordinarily or always governs where conduct‐regulating rules are
involved as inconsistent with the law as clearly established by New Yorkʹs
highest court in Schultz.
13 With respect to jurisdiction over the Lebanese Canadian Bank, we were
unsure as to New Yorkʹs applicable law and therefore certified questions to the
New York Court of Appeals in order to answer the question in a manner
consonant with the Stateʹs jurisprudence. We harbor no similar doubts as to the
issues we resolved by per curiam opinion in AmEx.
III. Other Observations
First, we recognize that the decision in Bank of China is subject to appeal.
We issue this opinion nonetheless to make clear, in this complex set of
proceedings, that the substance of the First Department opinion insofar as it is
relevant to the appeal before us does not cause us to alter the conclusion we
reached in our per curiam opinion in AmEx.
Second, for reasons that become obvious upon a reading of the Bank of
China opinion, the facts in that case differ starkly from those before us. Beyond
our conclusions as to its challenge to the soundness of AmEx, we emphasize
that we offer no views as to the law affecting or the proper outcome of that case
and should not be understood to imply any.
14 CONCLUSION
For the foregoing reasons, we GRANT the appellantsʹ motion insofar as it
asks us to hear their petition for panel rehearing prior to the entry of a final
judgment in this appeal, and we DENY that petition.