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Second Circuit Affirms Rejection of AntiTerroris

Second Circuit Issues Important Anti-Terrorism Act Decision

In Short

The Situation: Many banks and other businesses face lawsuits under the Anti-Terrorism Act ("ATA") seeking to hold them liable for providing services to customers with varying degrees of often-attenuated connections to terrorist organizations.

The Result: The Second Circuit recently affirmed the district court's rejection of one such lawsuit in Weiss v. National Westminster Bank, PLC because the plaintiffs failed to establish each essential element of either primary or aiding-and-abetting liability. The court reiterated that neither theory of ATA liability is established by the mere fact that plaintiffs allege, or even prove, a connection between a customer and a terrorist organization.

Looking Ahead: This decision from the Second Circuit—a court with a key role in the development of ATA case law—provides support for banks and other businesses defending against ATA claims.

On April 7, 2021, in Weiss v. National Westminster Bank, PLC, the United States Court of Appeals for the Second Circuit affirmed a district court's rejection of plaintiffs' suit against a British bank under the ATA, as amended by the Justice Against Sponsors of Terrorism Act ("JASTA"). In recent years, banks and other businesses have faced an onslaught of lawsuits that seek to blame them for the actions of their customers. The Weiss decision emphasizes that courts should scrutinize such efforts to ensure that all—not just some—statutory elements have been satisfied.

In Weiss, plaintiffs contended that the defendant bank was liable because it provided banking services "to a charitable organization with alleged ties to Hamas"—including wire transfers from the customer to "thirteen charities that [the bank] allegedly knew, or willfully ignored, were controlled by, or were alter egos of, Hamas." This, the plaintiffs argued, made the bank liable under the ATA's provision for suit by a U.S. national "injured in his or her person, property, or business by reason of an act of international terrorism" for "numerous terrorist attacks in Israel between March 27, 2002, and September 24, 2004" committed by Hamas.

Writing for a unanimous panel, Judge Kearse concluded that the district court correctly ruled, in granting summary judgment, that the plaintiffs' evidence was insufficient to support claims for either primary or aiding-and-abetting liability under the ATA. As to primary liability, the Second Circuit reiterated its holding from Linde v. Arab Bank, PLC, 882 F.3d 314 (2d Cir. 2018), that a plaintiff must establish each of the statutory elements of an "act of international terrorism" to maintain a claim under the ATA, including that the act in question "involved violence or endangered human life" and "appeared to be intended to intimidate or coerce a civilian population or to influence or affect a government." While the plaintiffs in Weiss had established that the bank provided banking services to a charitable organization with alleged ties to Hamas and that the U.S. government designated the organization as a Specially Designated Global Terrorist in 2003, those facts were not enough to establish the bank's primary liability under the ATA. 

The Second Circuit reiterated that a bank's provision of material support even "to a known terrorist organization is not, by itself, sufficient to establish the bank's liability under the ATA." The Second Circuit noted that the bank's customer and the 13 charities did in fact "perform[] charitable work," there was "no evidence that those charities had funded terrorist attacks or recruited persons to carry out such attacks," and there was no evidence that the bank's customer had identified any of the requested transfers "as being for any violent or terroristic purpose." Accordingly, the Second Circuit agreed with the district court that the plaintiffs had provided no evidence that the transfers in question "involved violence, or danger to human life, or had the appearance of intending to intimidate or coerce a population or government," thereby failing to establish two of the four requisite statutory elements.

The Second Circuit reached a similar conclusion with respect to aiding-and-abetting liability. The court reiterated its holding from Siegel v. HSBC North America Holdings, Inc., 933 F.3d 217, 224 & n.6 (2d Cir. 2019), that aiding-and-abetting liability is not established by proof that a defendant was "aware, based on public reports, that its banking customer was believed by some to have links to terrorist organizations." Moreover, the court highlighted Siegel's statement that even proof that a bank helped a customer "violate banking regulations despite knowing that [the customer] supported terrorist organizations" would not meet the requirements for aiding-and-abetting liability without further proof that the bank "knowingly assumed a role . . . in terrorist activities" and "substantially assisted . . . in those activities." Based on those principles, the Second Circuit agreed with the district court that the same evidence that defeated the plaintiffs' primary liability claims defeated their aiding-and-abetting liability claims as well.

While other ATA cases remain pending, the Second Circuit's ruling in Weiss highlights that the court is continuing to draw a sharp and clear line between primary and secondary liability, requiring litigants to provide evidence to support each and every element of a primary or secondary liability claim, and acknowledging that while a litigant may satisfy one of the statutory elements, that does not mean it has satisfied all of them. Given the Second Circuit's key role in the development of ATA case law, this decision is particularly significant for the numerous banks facing ATA claims that seek to hold them liable for providing services to customers alleged to have varying degrees of often-attenuated connections to terrorist organizations.

Two Key Takeaways

  1. The Second Circuit's ruling in Weiss highlights the court's continued focus on drawing a sharp line between primary and secondary ATA liability, emphasizing that the elements under these two theories of liability are distinct and that, to establish either theory, a plaintiff must satisfy each and every applicable element.
  2. Weiss provides strong support from a highly influential court for banks and other businesses defending against ATA claims. It reinforces that such claims are not established by the mere fact that plaintiffs can allege, or even prove, a connection between a customer and a terrorist organization.

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