O'Neill v. Garland

District Court, District of Columbia·Decided December 5, 2022·No. Civil Action No. 2021-1288·Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

CHRISTINE I. O’NEILL, et al.,

Plaintiffs, v. Civil Action No. 21-1288 (JEB)

MERRICK B. GARLAND, et al.,

Defendants.

MEMORANDUM OPINION

In 2015, Congress established the United States Victims of State Sponsored Terrorism Fund, which draws largely from sanctions penalties to compensate those who have obtained judgments against foreign countries for acts of state-sponsored terrorism. Plaintiffs are 9/11- related claimants, who, for the count that remains in this case, became eligible to draw payments from the Fund only in the third round of distributions. They bring this proposed class action under the Administrative Procedure Act to challenge the method for calculating payments devised by the Special Master of the Fund. Such method, they believe, unlawfully penalizes those who did not participate in the first two rounds. Plaintiffs therefore ask this Court to mandate additional payments to similarly situated third-round claimants. Government Defendants not surprisingly object, and they now move to dismiss for lack of jurisdiction or, in the alternative, for summary judgment.

The Court ultimately agrees with the Government that it is powerless to entertain the merits of Plaintiffs’ claim. Congress expressly and broadly precluded judicial review of decisions by the Special Master with regard to compensation from the Fund. As this lawsuit at

bottom challenges such decisions, it falls squarely within that preclusion provision. The Court, accordingly, will dismiss this action for lack of subject-matter jurisdiction. I. Background A. Statutory Background Under the Foreign Sovereign Immunities Act, courts can order state sponsors of terrorism to pay damages to their victims. See 28 U.S.C. § 1605A. Congress has facilitated victims’ ability to collect these damages in multiple ways, including by setting up the United States Victims of State Sponsored Terrorism Fund in 2015. See Compensation for United States Victims of State Sponsored Terrorism Act, Pub. L. No. 114-113, § 404, 129 Stat. 2242, 3007 (2015). Our legislature has subsequently amended the Terrorism Act twice — first in 2019 and then in 2020 — with ramifications for the Fund that are discussed below. See United States Victims of State Sponsored Terrorism Fund Clarification Act, Pub. L. No. 116-69, § 1701, 133 Stat. 1134, 1140–43 (2019); Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, § 1705, 134 Stat. 1182, 3292 (2020).

When setting up the program in 2015, Congress initially appropriated $1.025 billion to the Fund. See Pub. L. No. 114-113, § 404(e)(5). It then directed that future funding come from certain forfeiture proceeds, penalties, and fines from federal civil and criminal matters involving state sponsors of terrorism. Id. § 404(e)(2). Of those funding streams, all of the proceeds of qualifying criminal cases and 75% of the proceeds from qualifying civil penalties (initially 50% before Congress increased the percentage in the 2019 Clarification Act) are deposited into the Fund. Id.; Pub. L. No. 116-69, § 1701(b)(1)(C)(ii).

To “administer the compensation program,” Congress directed the Attorney General to appoint a Special Master. See 34 U.S.C. § 20144(b)(1)(A). The Special Master is charged with

soliciting claims, determining which are eligible, and dispensing compensation in accordance with the Terrorism Act’s prescriptions. See ECF No. 26 (MTD) at 5. More specifically, the statute mandates that she first cap claims at $20 million, see 34 U.S.C. § 20144(d)(3)(A)(ii)(I), then divide all available funds among the claimants “on a pro rata basis, based on the amounts outstanding and unpaid on eligible claims.” Id. § 20144(d)(3)(A)(i)(I), (III). As for timing, the Terrorism Act contemplated the Special Master’s authorizing a first round of payments within a year of December 18, 2015, a second round less than two years thereafter, and subsequent rounds annually, so long as money remained available. See Pub. L. No. 114-113, §§ 20144(d)(2)–(4). As of this writing, there have been three such distributions, with the Special Master expected to authorize round-four payments on eligible claims by January 1, 2023. See U.S. Victims of State Sponsored Terrorism Fund, http://www.usvsst.com [https://perma.cc/LKF8-PPZ4].

Among those eligible for payments from the Fund are individuals with a final district-

court judgment holding a designated state sponsor of terrorism liable for damages from an injury arising from torture, extrajudicial killing, aircraft sabotage, hostage taking, or providing material support for these actions. See 34 U.S.C. § 20144(c), (j). For the first four years of the Fund’s existence, 9/11-related claimants who had participated in the separate 9/11 Victims Compensation Fund were excluded from receiving payments. See Pub. L. No. 114-113, § 404(d)(3)(ii). Congress later removed that limitation in the 2019 Clarification Act, opening the door for otherwise eligible claimants who had participated in the 9/11 VCF to bring claims to the Fund. As a result, for third-round and future distributions, the Clarification Act requires that the Fund divide the total amount of available funds evenly between 9/11-related claimants (including VCF award recipients) and non-9/11-related claimants (including other judgment holders and Iran hostage-crisis victims and their families). See Pub. L. No. 116-69, § 1701(b)(1)(C)(i)

(codified at 34 U.S.C. § 20144(d)(3)(A)(i)(I)). Within each of these two pools of claimants, the Fund would continue to distribute awards pro rata. See 34 U.S.C. § 20144(d)(3)(A)(i)(II), (III).

B. Procedural Background Plaintiffs are 9/11-related claimants who bring this proposed class action on behalf of all such claimants, including those who received payments in the first and second distributions as well as those who, due to their prior participation in the 9/11 VCF, were eligible to receive payments beginning only with the third distribution. See ECF No. 1 (Compl.), ¶¶ 26–33. As explained below, given the dismissal of one cause of action, the only claim that survives concerns this latter group of Plaintiffs. See id., ¶ 27. They principally contend that the Special Master violated the Terrorism Act by establishing a payment methodology — reflected in a written explanation that is made available to claimants in connection with each round of payments — that improperly results in underpayments to 9/11-related claimants newly eligible to draw from the Fund in the third round. See U.S. Victims of State Sponsored Terrorism Fund, Payment Information, http://www.usvsst.com/payment.php [https://perma.cc/P5VA-A9H2]. This error, Plaintiffs argue, stemmed from the Special Master’s calculating payments from the Fund in each of the first three rounds based on the full amount of all eligible judgments each claimant had previously obtained, “even if those judgments had already received partial payments from the [Fund] in prior years.” Compl., ¶¶ 71–72. The result is that new claimants to the Fund have to take smaller bites from a pie that has already been nibbled at by return claimants. Plaintiffs argue that this approach contravenes the Terrorism Act’s requirement that the Special Master make her pro rata payment calculations based on the “amounts outstanding and unpaid on eligible claims.” 34 U.S.C. § 20144(d)(3)(A)(i)(II), (III). They thus ask the Court

to mandate a different formula for future distributions, which would include reimbursing them for the prior errors. See ECF No. 28 (Pl. Cross-MSJ) at 27.

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