ESTATES OF YARON UNGAR v. PALESTINIAN AUTHORITY

304 F.Supp.2d 232 (2004) | Cited 10 times | D. Rhode Island | January 27, 2004

1 On July 21, 2001, this Court dismissed all claims arising out ofEfrat Ungar's death because they were brought under 18 U.S.C. § 2333,and the Complaint did not allege that Efrat Ungar was a United Statesnational. Estates of Ungar ex rel. Strachman v. The PalestinianAuth., 153 F. Supp.2d 76, 97 (D.R.I. 2001) (hereinafter, UngarI). This included the claims of Efrat Ungar's Estate, those filed byRabbi Uri Dasberg and Judith Dasberg in their individual capacities, andclaims on behalf of Davir and Yishai Ungar. Id.

2 On July 24, 2001, this Court dismissed Defendants Yasser Arafat,Jibril Rajoub, Muhammed Dahlan, Amin Al-Hindi, Twfik Tirawi, and RaziJabali due to a lack of personal jurisdiction. Ungar I,153 F. Supp.2d at 100.

MEMORANDUM AND ORDER

This matter is before the Court on Plaintiffs' motion to enter afinal judgment against the Hamas Defendants pursuant to Rule 54(b) of theFederal Rules of Civil Procedure. The Hamas Defendants includeHamas — Islamic Resistance Movement (a.k.a. "Harakat Al-MuqawamaAl-Islamiyva") (hereinafter, Hamas), and the following individual Hamasoperatives who are responsible for the shooting attack that killed Yaronand Efrat Ungar: Abdel Rahman Ismail Abdel Rahman Ghanimat, Jamal AbdelFatah Tzabich Al Hor, Raed Fakhri Abu Hamdiya, Ibrahim Ghanimat, and ImanMahmud Hassan Faud Kafishe, ("the individual Hamas defendants").Plaintiffs request that this Court: 1) adopt the Report andRecommendation issued by Magistrate Judge David L. Martin on July 3,2003 and grant their motion to enter a default judgment against Hamas;2) determine that there is no just reason for delaying the entry of afinal judgment; and 3) direct the Clerk to enter a final judgmentconsistent with the Report and Recommendation, plus prejudgment interest.

The facts of this case are described at length in this writer'sprevious opinions. See Ungar I, 153 F. Supp.2d 76,82-85Page 3(D.R.I. 2001); The Estates of Ungar ex rel. Strachman v. ThePalestinian Auth., 228 F. Supp.2d 40, 41-43 (D.R.I. 2002)(hereinafter, Ungar II); and the attached Report andRecommendation. Therefore, there is no need to repeat the tragic eventsand extensive procedural history underlying this litigation. It sufficesto say that on June 13, 2002, this writer referred Plaintiffs' Motion toEnter Default Judgment Against Hamas and the individual Hamas defendantsto Magistrate Judge David L. Martin for preliminary review, findings, andrecommended disposition pursuant to 28 U.S.C. § 636(b)(1)(B) andLocal Rule 32(a). In July of 2002, Judge Martin held a three day hearingon Plaintiffs' motion to enter a default judgment and took the matterunder advisement.

Judge Martin reviewed the submitted memoranda and exhibits, performedindependent research, and then issued an extensive Report andRecommendation on July 3, 2003. He recommended that this Court grantPlaintiffs' motion to enter a default judgment against Hamas but deny themotion as to the individual Hamas defendants and dismiss the claimsagainst those defendants for lack of personal jurisdiction. Reportand Recommendation, at 63. Judge Martin also recommended that thisCourt award Plaintiffs a total of $116,409,123.00 in damages, plusprejudgment interest, attorneys fees of $65,621.25, and costs of$1,437.72. Id. at 63. However, the Report and Recommendationdid not direct this CourtPage 4to any legal authority supporting the prejudgment interest awardand was silent on the applicable interest rate. On July 10, 2003, duringa hearing on related matters, this writer suggested that Plaintiffsprovide the Court with an analysis of the legal basis for awardingprejudgment interest and the appropriate interest rate.

The time period for filing objections to the Report and Recommendationset forth in Rule 72(b) of the Federal Rules of Civil Procedure and LocalRule 32 elapsed on July 22, 2003, with no objection having been filed.Plaintiffs filed the present motion on August 18, 2003, and submitted therequested analysis regarding prejudgment interest and a proposed decisionand order. This Court heard oral argument on October 1, 2003, and tookthe matter under advisement. At this writer's request, Plaintiffs latersubmitted a supplemental memorandum on the issue of whether prejudgmentinterest is permissible on an award of punitive or treble damages. Thematter is now in order for decision.

This Court accepts and adopts Judge Martin's Report and Recommendationexcept as hereafter noted regarding prejudgment interest. Judge Martinrecommended that this Court award Plaintiffs prejudgment interest but didnot recommend a particular rate of interest to apply. Report andRecommendation, at 62. Plaintiffs urge this Court to awardprejudgment interest at a rate of nine percent per annum. Mem. inSupp. of Pls.' Mot.Page 5for Entry of Final J. Against Hamas Pursuant to Fed.R. Civ.P. 54(b), at 9 (citing Chang v. Univ. of R.I.,606 F. Supp. 1161, 1275 (D.R.I. 1985)). Plaintiffs cite to this Court'slongstanding practice of applying a nine percent interest rate in civilrights actions and argue that there is no reason to award victims ofterrorist acts any less. Id. They ask that interest accrue fromJune 9, 1996, (the date of this tragic incident) on the entire amount ofthe proposed judgement or, alternatively, on the original compensatorydamages. Pls.' Supplemental Mem. in Supp. of their Mot. for Entry ofFinal J. Against Hamas Pursuant to Fed.R.Civ.P. 54(b), at 3.

Plaintiffs' Request for Prejudgment Interest

This Court need not decide the applicable prejudgment interest rate orwhether such interest applies to all or part of the judgment for tworeasons. First, the congressional purpose behind 18 U.S.C. § 2333 wasto deter acts of international terrorism and this Court will not addprejudgment interest to the substantial penalties of treble damages,court costs, and attorney's fees already provided for by Congress.Second, this Court finds the treble damages provision of18 U.S.C. § 2333 overwhelmingly punitive, which makes an award of prejudgmentinterest inappropriate. Therefore, this Court declines to adopt JudgeMartin's recommendation that Plaintiffs be awardedPage 6prejudgment interest.

When a complaint presents a federal question, the issue of whether ornot the plaintiff may recover prejudgment interest is a matter of federallaw. Robinson v. Watts Detective Agency, 685 F.2d 729, 741 (1stCir. 1982). When there is no provision in the statue in questionregarding prejudgment interest, the court looks to federal common law forguidance. Id. Federal case law in this area is clear. Thedecision of whether or not to award prejudgment interest rests within thesound discretion of the trial court. Criado v. IBM Corp.,145 F.3d 437, 446 (1st Cir. 1998); Conway v. Electro Switch Corp.,825 F.2d 593, 602 (1st Cir. 1987); United States v. Cal. State Bd.of Equalization, 650 F.2d 1127, 1132 (9th Cir. 1981);Chang, 606 F. Supp. at 1274. See alsoRao v. New York City Health and Hosps. Corp., 882 F. Supp. 321,325 (S.D.N.Y. 1995) and Bingham v. Zolt, 810 F. Supp. 100, 101(S.D.N.Y. 1993)(both noting that when the applicable federal statue issilent on the availability of prejudgment interest, a court may awardsuch interest in accord with its equitable discretion). The districtcourt has wide latitude in determining the appropriate remedy and thereis no abuse of discretion when its award makes the plaintiff whole and issufficient to deter the defendant from future wrongdoing.Criado, 145 F.3d at 446. Prejudgment interest is presumptivelyavailable in suits brought under federal law, unless punitivePage 7damages are also awarded. Parington v. Broyhimm FurnitureIndus. Inc., 999 F.2d 269, 274 (7th Cir. 1993).

The Supreme Court's decision in Rodgers v. United States,332 U.S. 371 (1947), guides a court in deciding whether or not to awardprejudgment interest. The Court noted that penalties imposed by an Act ofCongress bear interest only if and to the extent that interest isrequired by federal law. Rodgers, 322 U.S. at 373. AbsentCongress' unequivocal prohibition of prejudgment interest, courts shouldgrant or deny interest by looking to the congressional purpose underlyingthe particular statute. Id. at 373; Golden State TransitCorp. v. City of Los Angeles, 773 F. Supp. 204, 208 (C.D. Cal.1991)(citing Rodgers, 322 U.S. at 373). Seealso Segal v. Gilbert Color Sys. Inc., 746 F.2d 78,82 (1st Cir. 1984)(when the statue is silent on the question ofprejudgment interest, courts turn to legislative history). InRodgers, the framework of the Agricultural Adjustment Act andthe reports of the congressional committees that drafted it demonstrateda primary purpose to limit farm production and marketing to the quotasallotted by law, and an intent to deter farmers from exceeding thosequotas. 332 U.S. at 374. Given this clear intent to deter, the Courtconcluded that Congress did not also intend for courts to add prejudgmentinterest to the substantial penalties already imposed on non-cooperatingfarmers. Id. at 376.Page 8

In the instant case, Plaintiffs brought their Complaint pursuant to18 U.S.C. § 2333. Enacted as part of the Antiterrorism Act of 19913,Section 2333 states: Any national of the United States injured in his or her person, property, or business by reason of an act of international terrorism, or his or her estate, survivors, or heirs, may sue therefor in any appropriate district court of the United States and shall recover threefold the damages he or she sustains and the cost of the suit, including attorney's fees.28 U.S.C. § 2333(a) (1992). Like the Agricultural Adjustment Actin Rodgers, neither Section 2333 nor any other federal statuteaddress the issue of prejudgment interest in this context. Therefore,this writer turns to the legislative history of Section 2333 to determineCongress' purpose for creating the treble damages on which Plaintiffsrequest prejudgment interest.Page 9

On April 14, 1990, Senator Charles E. Grassley (R. Iowa) introducedS.2465, (now 18 U.S.C. § 2333) a bill providing a new, federal, civilcause of action for acts of international terrorism. S. Rep. No. 102-17,at 63 (1991). The bill was intended to fill a gap in the law byestablishing a civil counterpart to the existing criminal statutes. 136Cong. Rec. S14279-01 (1990). S.2465 gave victims of terrorism theremedies of traditional American tort law, including treble damages andattorney's fees. 137 Cong. Rec. S4511-04 (1991).

The legislative history of 18 U.S.C. § 2333 evinces a clearcongressional intent to deter and punish acts of international terrorism.During the floor debates, Senator Grassley spoke of holding terroristsaccountable "where it hurts them most: at their lifeline, their funds."136 Cong. Rec. S14279-01 (1990). He stated that his bill would putterrorists on notice "to keep their hands off Americans and their eyes ontheir assets," 136 Cong. Rec. S14279-01, and "would allow victims topursue renegade terrorist organizations, their leaders, and the resourcesthat keep them in business, their money." 138 Cong. Rec. S17252 (1992).

The Subcommittee on Courts and Administrative Practice held a hearingon S.2465 where the testimony focused on the bill's deterrent effect onthe commission of acts of internationalPage 10terrorism against Americans. Antiterrorism Act of 1990:Hearing on S2465 Before the Subcomm. on Cts. and Admin. Practice of theComm. on the Judiciary U.S. S., 101st Cong. (1990). One witness toldthe committee that in order to be an effective weapon against terrorism,S2465 had to punish by "hitting terrorists where it hurts, in theirpockets." Id. at 133(statement of Wendy Collins Perdue,Associate Professor, Georgetown University Law Center). Joseph A. Morris,President and General Counsel for the Lincoln Legal Foundation inChicago, testified that S.2465 would impose liability at any point alongthe chain of terrorism and would "interrupt, or at least imperil, theflow of terrorism's lifeblood, money." Id. at 85. While notingthat executing civil judgments may be difficult, Morris testified thatthe bill would contribute to the antiterrorism struggle by deterringterrorists from choosing American targets and by "drying up terrorism'sfinancial support in the United States." Id. at 85. He alsonoted the deterrent power of provisions allowing for treble damages,court costs, and attorney's fees. Id. at 89. Another witnesstestified that it would not be enough to simply go after the individualterrorists; the bill must "strike at the heart of the organization" and"go after the funding." Id. at 110 (statement of Daniel Pipes,Director of the Foreign Policy Research Institute).

Thus, the legislative history of Section 2333 shows anPage 11unequivocal congressional intent to deter acts of internationalterrorism and punish those who commit such acts against Americancitizens. A New York District Court arrived at a similar conclusion whenit denied punitive damages to two relatives of victims of the September11, 2001 attacks on the World Trade Center. Smith v. Islamic Emirateof Afghanistan, 262 F. Supp.2d 217, 240 (S.D.N.Y. 2003). That Courtheld that it would not award additional punitive damages because thetreble damages provision of 18 U.S.C. § 2333 already provided apenalty. Id. at 240. Given Congress' clear intent to deter andpunish terrorist acts, this Court is unable to conclude that Congressalso intended to add interest to the substantial penalties of trebledamages, court costs, and attorney's fees that are already imposed by thestatute. Therefore, Plaintiffs' request for prejudgment interest must bedenied.

Prejudgment interest is also inappropriate in this case because thetreble damages provision of Section 2333 is overwhelmingly punitive, andprejudgment interest does not apply to a punitive damages award.See infra, at pg. 12. Prejudgment interest andtreble, or multiple damages, serve different purposes. Suiter v.Mitchell Motor Coach Sales Inc., 151 F.3d 1275, 1289 (10th Cir.1998). Prejudgment interest compensates a plaintiff for being deprived ofthe monetary value of his or her loss from the time of the loss until thepayment of judgment.Page 12Id. at 1288; Paper Converting Mach. Co. v.Magna-Graphics Corp., 745 F.2d 11, 23 (D.C. Cir. 1984).See also Osterneck v. Ernst & Whinney,489 U.S. 169, 175 (1989)(prejudgment interest has been traditionallyconsidered part of the compensation due to the plaintiff); GoldenState Transit Corp., 773 F. Supp. at 208 (prejudgment interest is anelement of compensation and not a penalty). In contrast, multiple ortreble damages serve to punish and are thus punitive in nature.McEvoy Travel Bureau Inc. v. Norton Co., 563 N.E.2d 188, 196(Mass. 1990). See also, Suiter, 151 F.3d at 1289;Paper Converting Machine Co., 745 F.2d at 23.

Prejudgment interest does not apply to punitive damages awards.United States v. Reul, 959 F.2d 1572, 1578 (D.C. Cir. 1992);Wickham Contracting Co. v. Local Union No. 3, Int'l. Bhd. of Elec.Workers, 955 F.2d 831, 834 (2d Cir. 1992). Seealso Murphy v. United Steelworkers of America,507 A.2d 1342, 1346 (R.I. 1986)(holding that Rhode Island's prejudgmentinterest statute does not apply to punitive damages); Right toPrejudgment Interest on Punitive or Multiple Damages Awards, 9A.L.R. 5th 63 (1993)(noting that attempts to collect prejudgment intereston punitive and statutory multiple damages are unsuccessful in a majorityof courts). In City Coal Co. of Springfiled, Inc. v. Noonan,the Massachusetts Supreme Judicial Court decided not to award prejudgmentinterest on the treble damages awarded pursuantPage 13to a state law. 751 N.E.2d 894, 900 (Mass. 2001). The Court notedthat no compensatory purpose would be served by imposing interest onpunitive damages and saw no reason to exempt treble damages from theprinciple that adding interest on punitive damages has the "flavor ofunseemly piling on." Id. In addition, a New York District Courthas found that the treble damages available in actions under theRacketeer Influenced and Corrupt Organizations Act ("RICO") adequatelycompensate plaintiffs and obviate the need for prejudgment interest.Bingham, 810 F. Supp. at 102. See alsoTrans World Airlines, Inc. v. Hughes, 449 F.2d 51, 80 (2d Cir.1971) rev'd on other grounds, 409 U.S. 363, 389 (1973)(findingthat the treble damages provided for under the Clayton Act sufficientlycompensated the plaintiff and made an award of prejudgment interestunnecessary).

This Court recognizes that no amount of money will ever adequatelycompensate Plaintiffs for the devastating and incomprehensible lossesthat they suffered as a result of these heinous terrorist acts. However,Congress' clear intent to deter and punish those who commit acts ofinternational terrorism makes Section 2333 overwhelmingly punitive andprecludes this Court from awarding prejudgment interest on what isessentially a punitive damages award.

Plaintiffs rely on Atena Cas. Sur. Co. v. Rodco Autobody,43 F.3d 1546, 1571 (1st Cir. 1994), for their argument that there isPage 14no abuse of discretion when a court applies prejudgment interest toa treble damages award under a federal statute. Pls.' SupplementalMem. in Supp. of their Mot. for Entry of Final J. Against Hamas Pursuantto Fed.R.Civ.Pro. 54(b), at 2. However, the discussion ofprejudgment interest in Atena Casualty, is dictum because thedefendant failed to preserve that issue for appeal. 43 F.3d at 1571. TheFirst Circuit recognized "some force" in the defendant's argument thatprejudgment interest on treble damages was inappropriate because thosedamages were punitive. Id. However, the Court noted that itcould be reasonably argued that damages in RICO actions were primarilycompensatory and that an award of prejudgment interest was proper.Id. at 1572.

Given the legislative history discussed above, it cannot be reasonablyargued that the treble damages provided for in Section 2333 are primarilycompensatory. The punitive aspect and congressional intent to deter andpunish those who commit terrorist acts permeate the statute andovershadow its compensatory aspects. Therefore, this Court cannot adoptJudge Martin's recommendation that prejudgment interest be awarded.

Plaintiffs' Motion to Enter Final Judgment Against Hamas

This Court now turns to Plaintiffs' motion to enter a final judgementagainst Hamas. Since this writer adopts Judge Martin'sPage 15recommendation that the claims against the individual Hamasdefendants be dismissed for lack of personal jurisdiction, it is onlynecessary to consider Plaintiffs' motion with regard to Defendant, Hamas.

Rule 54(b) of the Federal Rules of Civil Procedure allows a court todirect the entry of a final judgment as to one or more but not all of theclaims or parties. A court granting a motion brought under Rule 54(b)must make: 1)an express determination that there is no just reason fordelay; 2)an express direction that judgment be entered; and 3)a brief butparticularized statement of its reasons for acting in order todemonstrate that the rule was properly invoked. Fed.R.Civ.P. 54(b).See also Feinstein v. Resolution TrustCorp., 942 F.2d 34, 39 (1st Cir. 1991)(citing Spiegel v. Trs.of Tufts Coll., 843 F.2d 38, 43, n.4 (1st Cir. 1988)); Quinn v.City of Boston, 325 F.3d 18, 26 (1st Cir. 2003)(noting that thetrial judge must make more than a "rote recital of Rule 54(b)'stalismanic phrase"). When a non-defaulting party continues to litigate,ensuring collection of a judgment is a proper basis under Rule 54(b) toenter a final judgment against a defaulting party. SeeStorage Computer Corp. v. Worldwide Domination Corp.,208 F.R.D. 474, 476 (D.N.H. 2002). In that situation, a delay in entering afinal judgment will cause an injustice to the plaintiff because theplaintiff may become unable to collect. Id.Page 16

This Court concludes that there is no just reason for delay andPlaintiffs' motion must be granted because the limited pool of Hamasassets against which Plaintiffs may execute this Court's judgment issteadily depleting. There is strong evidence that the Holy LandFoundation for Relief and Development ("HLF") operates as a fund-raiserfor Hamas in the United States. Holy Land Found. for Relief and Dev.v. Ashcroft, 333 F.3d 156, 163 (D.C. Cir. 2003). On December 4,2001, the Office of Foreign Asset Control, a division of the TreasuryDepartment, determined that the HLF acts "for or on behalf of" Hamas andwas thus a Specially Designated Terrorist under Executive Order 12947 anda Specially Designated Global Terrorist under Executive Order 13224.Holy Land Found. for Relief and Dev. v. Ashcroft,219 F. Supp.2d 57, 64 (D.D.C. 2002). These designations allowed the TreasuryDepartment to block all of the HLF's funds, accounts, and real property.Id.

The Terrorism Risk Insurance Act of 2002, ("TRIA") subjects the blockedassets of a terrorist party, and any agency or instrumentality of thatterrorist party, to execution or attachment in order to satisfy ajudgment against them on any claim based on an act of terrorism. Pub. L.No. 107-297, 116 § 201(a), Stat. 2322 (2002). The HLF is an agencyand instrumentality of Hamas because it acts "for or on behalf of" Hamasas Hamas' fund-raising agent in the United States.Page 17Therefore, the HLF's blocked assets are also subject to attachmentand execution under the TRIA in order to satisfy the present judgmentagainst Hamas.

However, these blocked assets are steadily depleting because theTreasury Department has allowed the HLF to use the assets to pay itsattorneys to challenge the blocking order and defend the HLF against acivil action arising from its collection of funds for Hamas. AnAsssessment of the Tools Needed to Fight the Financing of TerrorismBefore the Senate Comm. on the Judiciary, 107th Cong. Nov. 20, 2002(testimony of Nathan Lewin, Esq. of Lewin & Lewin, LLP),available at: 2002 WL 31648382, at *37. Any delay in entering afinal judgment against Hamas will allow further depletion of these assetsand reduce the amount of money available to satisfy this Court'sjudgment. Given Presidents Clinton and Bush's designations of Hamas as aterrorist organization, it is unlikely that Hamas will bring any newassets into the United States. See Exec. Order No. 12947, 60Fed. Reg. 5079 (Jan. 23, 1995); Exec. Order No. 13224, 66 Fed. Reg.49, 079 (Sept. 23, 2001). Therefore, the blocked assets of the HLF andHamas may be Plaintiffs' sole source of money to satisfy this Court'sjudgment. When the HLF and/or Hamas fully deplete these assets, thisCourt's judgment against Hamas will likely become a dead letter. Such aresult would defeat Congress' clear intent that 18 U.S.C. § 2333deter terrorist acts through thePage 18enforcement of civil causes of action such as the one presentlybefore the Court.

Simply put, time is of the essence. Any delay in entering a finaljudgment against Hamas may make Plaintiffs unable to collect thecompensation due to them and cause Plaintiffs to suffer furtherinjustices at the hands of Hamas. Therefore, it is the determination ofthis Court that there is no just reason for delay and that Plaintiffs'motion to enter a final judgment against Hamas should be granted.

For the afformentioned reasons, and those set forth in the Report andRecommendation attached hereto, this Court, hereby, 1) adopts JudgeMartin's Report and Recommendation, except with regard to prejudgmentinterest; 2)finds that there is no just reason for delay; and 3)ordersthe Clerk to enter a final judgment against Hamas with specificity in theamounts indicated below after the trebling provided for in18 U.S.C. § 2333: Estate of Yaron Ungar for lost earnings: $1,432,158.00 for pain and suffering of decedent: $1,500,000.00 Dvir Ungar (son) for loss of companionship, society, and guidance and mental anguish: $30,000,000.00 For loss of parental services: $488,482.504 Yishai Ungar (son) for loss of companionship, society, and guidance and mental anguish: $30,000,000.00 for loss of parental services: $488,482.505 Judith Ungar (mother) for loss of society and companionship and mental anguish: $15,000,000.00 Meir Ungar (father) for loss of society and companionship and mental anguish: $15,000,000.00 Michal Cohen (sister) for loss of society and companionship and mental anguish: $7,500,000.00 Amichai Ungar (brother) for loss of society and companionship and mental anguish: $7,500,000.00 Dafna Ungar (sister) for loss of society and companionship and mental anguish: $7,500,000.00

-------------- Total: $116,409,123.00Page 19

Plaintiffs, as a group, are also awarded $65,621.25 for attorney'sfees and $1,437.72 in court costs.

The Clerk shall enter judgment forthwith.

3 Congress originally enacted Sections 2331-2338 as part of theAntiterrorism Act of 1990. Pub. L. No. 101-519, § 132, 104 Stat.2250-2253 (1990). However, that Public Law has no currently effectivesections. Congress re-enacted these sections as part of the FederalCourts Administration Act of 1992. Pub. L. No. 102-572, Title X, §1003(a)(1)-(5), 106 Stat. 4521-4524 (1992), which was amended on October31, 1994 to Pub. L. No. 103-429, § 2(1), 108 Stat. 4377. UngarII, 228 F. Supp.2d at 41 n.1.

4 The amount designated for loss of parental services shall be paidto the legal guardians of Dvir Ungar.

5 The amount designated for loss of parental services shall be paidto the legal guardians of Yishai Ungar.Page 20

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