Justices Wrestle With Procedural Rules in Hamas Victim Suit (2)

The US Supreme Court appeared likely to tell a lower court to reconsider a ruling that could revive a lawsuit families of victims killed in Hamas attacks brought against a Lebanese bank.

Justices on both sides of the bench at arguments on Monday seemed to agree the US Court of Appeals for the Second Circuit had missmashed the rules of civil procedure when it said the district court considered the wrong standard in refusing to reopen the case it had dismissed.

“Why don’t we just say the outlier position is wrong, go back, and try it again?” Justice Elena Kagan asked.

The Second Circuit said the district court erred in considering the families’ request under a high bar that requires a showing of extraordinary circumstances when it should have weighed that in tandem with another procedural rule that liberally allows parties to amend their suits.

“That’s different from what even you say is the right way to look at this,” Justice Elena Kagan told the families’ attorney Michael Radine.

The case alleging BLOM Bank SAL aided and abetted terrorists in the early 2000s raises a technical question about procedural rules that could make it either much easier or much harder for people to relitigate cases after they lose in court.

Justice Neil Gorsuch echoed Kagan in asking Radine what objection he would have to a short ruling from the court that says there isn’t this jumble of rules.

Radine, of Osen LLC, said the court could issue a ruling that says only Rule 60(b)(6)'s “extraordinary circumstances” applies and Rule 15 is not governing here.

“How about putting a period there?” Gorsuch asked.

Dozens of victims and the families of victims alleged in their original lawsuit that the bank helped three Hamas fundraisers–Sanabil, Subul al-Khair, and Union of Good–convert millions of dollars in donations abroad into cash, which was then used to recruit Palestinians living in Lebanon to join and support Hamas.

To hold the bank liable under the Justice Against Sponsors of Terrorism Act, the victims had to plausibly allege the bank was generally aware of its customers’ alleged ties to Hamas. The district court said the families failed to do that, despite multiple opportunities to amend their lawsuit, and tossed their case.

The Second Circuit affirmed the decision even though it said the district court had applied the wrong standard to show the bank knew it was assisting customers connected to Hamas.

Justice Brett Kavanaugh asked why the families didn’t ask for a rehearing after the appeals court affirmed the district court’s decision to dismiss their case. The families instead asked the district court to reopen their case after final judgment so they could amend their complaint.

Not only was there not obligation to ask for a rehearing, it appears to be regular practice to go back to the district court, Radine argued.

But the BLOM Bank SAL’s attorney Michael McGinley, of Dechert LLP, said the victims and the families declined multiple opportunities to amend their complaint in both the trial court and on appeal.

“We won dismissal in 2021, we won affirmance in 2022, and somehow we’re here three years later talking about a zombie case that should have been over years ago,” he said.

McGinley said the families haven’t offered a justification to reopen the case other than that they mistakenly believed their original complaint was sufficient.

“That hardly qualified as extraordinary circumstances,” he said. “It is litigator’s remorse and that is not enough for Rule 60 (b)(6) relief.”

Justice Ketanji Brown Jackson expressed worry that ruling for BLOM Bank SAL will punish people for exercising their right to appeal.

“You’re saying, ‘it’s okay to amend if you don’t appeal. But, if you appeal and you lose, you’re not going to be able to amend anymore,’” she said. “And I think that burdens the right to appeal in a way that is not exactly the way these rules should be read.”

A ruling in the case is expected by end of June or beginning of July.

The case is BLOM Bank SAL v. Honickman, U.S., No. 23-1259, argument 3/3/25.