Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

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RUBIN v. THE ISLAMIC REPUBLIC OF IRAN (March 29, 2011)

A number of American citizens suffered physical and emotional injuries in a September 4, 1997 suicide bombing in Jerusalem. Several of them brought suit and obtained a $71.5 million default judgment against Iran, based on the country's training and support of Hamas. In an effort to collect on its judgment, the plaintiffs registered the judgment in Illinois and served Citations to Discover Assets on the Oriental Institute and the Field Museum. The Oriental Institute holds two collections of Persian antiquities on loan from Iran for academic study. The Field Museum holds a collection of Persian pottery and metalworks although the Field Museum claims ownership of these works and Iran does not dispute the claim, the plaintiffs assert that Iran does own the collection because they were stolen and smuggled out of the country decades ago. The museums asserted that the collections were immune from attachment under § 1609 of the Foreign Sovereign Immunities Act. Judge Manning (N.D. Ill.) ruled that only a foreign state can raise § 1609 immunity. Soon thereafter, Iran appeared and asserted its immunity. But Iran's appearance changed the litigation’s direction. The plaintiffs served Iran with discovery requests and deposition notices that sought information not only regarding the Chicago collections but also with respect to Iran's assets in the United States generally. Iran sought a protective order and moved for summary judgment on the immunity issue. The court granted the plaintiffs additional discovery before having to respond to the motion and ordered Iran to respond to general asset discovery. Iran appeals the general asset discovery order as well as the earlier order requiring it to appear and assert its immunity.

In their opinion, Circuit Judges Bauer and Sykes and District Judge Simon reversed and remanded. The Court first addressed its appellate jurisdiction, given the general rule that a order authorizing discovery is not immediately appealable. Orders denying immunity are appealable under the collateral order doctrine, and the district courts decision ordering discovery, in effect, did just that. The earlier order appealed presented a slightly different question. That order denying immunity was immediately appealable under the collateral order doctrine. But the museums did not appeal and that time has run. The effect of the museums' failure to immediately appeal is that the order is appealable the next time an appealable order is entered. Although the Court noted that, in most cases, the next appealable order is the final judgment, it is not necessarily so. Here, there is a second appealable order so the first order is properly under review. The Court turned to the merits and the interpretation of the Foreign Sovereign Immunity Act. The Act generally codified the common law of sovereign immunity. It contains two principal sections: § 1604 makes a foreign state immune from the jurisdiction of United States courts and § 1609 makes a foreign state's property in the country immune from attachment. Each section has exceptions. For example, jurisdiction in this case was premised on a § 1605 exception for cases involving money damage claims resulting from torture or killing. Similarly, the plaintiffs rely on a § 1610 exception to attachment immunity when the foreign state's property in the country is used for commercial activity. But the district court never ruled on the exception’s merits. Instead, it ruled that Iran had to appear and affirmatively plead the exception and then, once it did appear, the court focused on discovery issues rather than the merits. The Court concluded that the district court failed to appreciate the tension between ordering discovery and the sovereign’s right to immunity. Immunity generally protects its beneficiary not only from liability but also from the burdens of litigation, like discovery. Iran is presumed immune from attachment – the plaintiffs must identify particular property and demonstrate that it fits one of the exceptions. The Court noted that the Second, Fifth, and Ninth Circuits agree that discovery should be allowed to proceed narrowly in these circumstances. Therefore, a plaintiff must identify specific property and set forth a plausible argument for an exception to immunity before a court orders discovery. With respect to the district court’s order that Iran had to appear, the Court also reversed. The Act provides that a sovereign’s assets in the country “shall be” immune from execution. Relying on that statutory language, the rest of the Act, the common law immunity history, and decisions from the Fifth and Ninth Circuits , the Court held that a foreign state need not appear to assert that its property is immune from attachment. The argument can be raised by the holders of the property or by the court itself.