Changing Anti-Terrorism Act Jurisprudence Increases Litigation Exposure

• Published date: 19 July 2022
• Subject Matter: Finance and Banking, Government, Public Sector, Litigation, Mediation & Arbitration, Financial Services, Terrorism, Homeland Security & Defence, Trials & Appeals & Compensation
• Law Firm: Jones Day
• Author: Mr Steven T. Cottreau (Steve), James Gauch, Fahad Habib, Henry Klehm III, Christopher Lovrien and Emily Goldberg Knox

In Short

The Situation: Following the 2016 enactment of the Justice Against Sponsors of Terrorism Act ("JASTA"), courts construed aiding-and-abetting liability narrowly, disallowing claims against defendants that did not deal directly with a terrorist organization or its proxy. Over the last year, however, courts have permitted claims that previously might have been dismissed to proceed to discovery. Plaintiffs meanwhile are increasingly filing JASTA claims against businesses whose services or products are further removed from any close connection to terrorist parties.

The Result: More lawsuits can be expected against companies conducting business in parts of the world where terrorism occurs or that have customers connected to these regions, and a greater percentage of these cases are likely to survive motions to dismiss and move into discovery.

Looking Ahead: Companies should review their due diligence practices with respect to existing customers and new business opportunities to account for changing litigation exposure to Anti-Terrorism Act ("ATA") liability moving forward. Banks and other private companies drawn into litigation must diligently defend themselves with proactive strategies to avoid secondary liability under the ATA.

JASTA's stated intention is to provide litigants "with the broadest possible basis" for relief against entities that have "provided material support, directly or indirectly, to foreign organizations or persons that engage in terrorist activities against the United States." Pub. L. No. 114-222, 130 Stat. 852, 853 (2016). Recent cases have moved away from interpretations of JASTA that permitted early dismissal of cases. As a result, more terrorism complaints have survived motions to dismiss, and an increasing number of cases are headed to discovery.

Legal Framework and Early Caselaw

JASTA expressly added aiding-and-abetting liability to the ATA. It provides a private right of action for plaintiffs who suffer an "injury arising from an act of international terrorism committed, planned, or authorized by an organization that had been designated as a foreign terrorist organization" against "any person who aids and abets, by knowingly providing substantial assistance." 18 U.S.C. ' 2333(d)(2). To state a claim, a plaintiff must plausibly allege facts showing: (i) an injury caused by an act of international terrorism; (ii) the act was committed, planned, or authorized by a designated Foreign Terrorist Organization ("FTO"); and (iii) the defendant aided and abetted the FTO by knowingly providing substantial assistance.

As to the last element, Congress expressly adopted the framework of Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983). JASTA, ' 2(a)(5). Under Halberstam: (i) "the party whom the defendant aids must perform a wrongful act that causes an injury"; (ii) "the defendant must be generally aware of his role as part of an overall illegal tortious activity at the time he provides the assistance"; and (iii) "the defendant must knowingly and substantially assist the principal violation." 705 F.2d at 477.

In the earliest JASTA aiding-and-abetting cases, courts issued opinions affirming early dismissals of these cases. First, the Second Circuit required that a defendant be "'generally aware' that it was ... playing a 'role' in [the terrorist party's] violent or life-endangering activities," in contrast to other statutes requiring only "knowledge of the organization's connection to terrorism." Linde v. Arab Bank, PLC, 882 F.3d 314, 329-30 (2d Cir. 2018) (affirming jury verdict). Second, the Second Circuit held that merely alleging that a defendant helped its customer...