A U.S. Supreme Court decision in May that backed terror victims' rights to $4.3 billion in punitive damages over a pair of 1998 U.S. embassy bombings may be overshadowed by a State Department deal that would include victim compensation. (iStock)
Terrorism victims often find themselves spending decades pursuing justice against state sponsors of that violence and learn that in the evolving — and often entangled — worlds of jurisprudence, federal law and diplomacy, justice can come in many forms.
For the victims and surviving families of a pair of bombings of U.S. embassies in 1998, a recent high-profile win at the U.S. Supreme Court may ultimately be trumped by an in-the-works State Department deal that would resolve claims against Sudan over its alleged role in the attacks and put the country on the path toward shedding its designation as a state sponsor of terrorism.
"A lot has happened to get here, and so a lot is at stake. We want to see this get over the finish line for so many people," Edith Bartley, a surviving family member of two victims of the embassy bombings and spokesperson for American victims, told Law360.
In 1998, al-Qaida bombed two U.S. embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, killing or injuring hundreds. Among those in the Nairobi bombing were Bartley's father, the embassy's U.S. consul general, and brother, an intern at the embassy.
Since the bombings, both American and non-American victims and surviving family members have fought for justice in many forms, including by going after Sudan and Iran for allegedly supporting the terror group in the years before the attack. There are seven consolidated lawsuits that have been making their way through the federal court system and ultimately secured a $10.2 billion default judgment in the D.C. Circuit.
On May 18, the Supreme Court gave victims — specifically a contingent of largely non-American victims pursuing $4.3 billion worth of punitive damages as part of that award — a major win by saying an amendment to the Foreign Sovereign Immunities Act could be applied retroactively to put Sudan on the hook for the punitive award. A few weeks later, the court denied several petitions from Sudan to revisit other issues with the lower court decision.
Victims, however, may see ultimate justice in the form of a State Department deal with Sudan, which would cut down the total amount of compensation for victims but see the country ultimately agree to settle claims it has been fighting in federal court, according to sources with knowledge of the negotiations.
"We recognize that no deal is perfect. As families, we are extremely pleased with Sudan to acknowledge responsibility and to be able to compensate families for a portion of those judgments," Bartley said.
Sudan at a Crossroads
Not everyone is happy.
The roughly $300 million bilateral claims agreement would see many of the non-American victims get about a tenth or less of the American victims, with some seeing nothing at all, according to a source with knowledge of the deal.
The source said that by concentrating the funds on certain families rather than distributing them on a pro rata basis, the deal creates a huge disparity among the victims and goes against what Congress intended when it amended the FSIA, which was to treat U.S. government employees equally. The deal also looks at nationality at the time of the bombings, even though several victims have since become U.S. nationals or citizens, the source said.
Some victims in the suit have voiced public opposition to the deal. The State Department "is betraying U.S. victims and the American principles of equality and rule of law that the Sudan-back terrorists found so threatening 20 years ago," Doreen Oport, who worked at the embassy in Kenya and was injured in the attack, said in a statement on behalf of similarly situated victims.
In a separate statement, Oport said, "We have presented a plan to Sudan and the U.S. State Department that would allow Sudan to extend out payment of our judgments so that it can take advantage of the many economic opportunities that will arise once it is removed from the State Sponsor of Terrorism List."
For many of the American victims, however, there is a sense that the deal would be a significant milestone in securing justice and larger diplomatic goals.
News of the possible deal comes as Sudan is at a crossroads.
Since ousting President Omar al-Bashir last year, the new government has been making significant diplomatic inroads across the international community. In February, the country indicated an openness to sending al-Bashir and others to stand trial before the International Criminal Court and struck a $70 million deal to resolve claims over another terrorist attack.
The purported State Department deal, if blessed by Congress, could lift Sudan's designation as a state sponsor of terror. Currently, there are only three other countries with that designation, which removes foreign sovereign immunity protections: North Korea, Iran and Syria.
Libya used to be on the list, until it struck a similar deal with the State Department.
"The Sudan claims settlement is modeled on the 2008 Libya claims settlement," said Stuart H. Newberger, a Crowell & Moring LLP partner representing some of the American victims of the embassy bombings.
Newberger, who authored "The Forgotten Flight: Terrorism, Diplomacy and the Pursuit of Justice" and has spent much of his career representing terrorism victims, played a major role in crafting the Libya deal.
With the Sudan deal, the State Department has made efforts to resolve claims on behalf of foreign nationals.
"Normally, the U.S. government can only settle claims for U.S. citizens, but it has gone out of its way to get funds for non-American citizens who either worked for the embassy or worked for contractors of the embassy," Newberger said.
Many of the victims, who were diplomats, government employees and aid workers, understand the need for diplomacy at this pivotal moment for Sudan, Newberger said. They also appreciate the significance of Sudan agreeing to strike a deal, suggested Matthew D. McGill, a Gibson Dunn & Crutcher LLP partner who has been representing a number of American and Tanzanian victims in the D.C. Circuit proceeding.
"For many of the victims and their families, it is very personally meaningful to have Sudan pay, even if it's not the full amount," McGill said.
A Mostly Symbolic Victory
The Supreme Court decision was a major victory for terrorism victims, but its practical impact is very narrow and also largely symbolic, experts say.
For one, it was a technical ruling on whether a 2008 amendment to the FSIA that allowed for punitive damages to be sought could be applied retroactively to pre-2008 terrorist events.
Christopher M. Curran of White & Case LLP, who represents Sudan, told Law360 at the time of the ruling that the country looked forward to further proceedings in the long-running case, highlighting the fact that the high court left open the question of punitive damages for state-law claims under the terror exception, which he said account for over 80% of the $4.3 billion in total punitive damages that the country faces.
"Sudan looks forward to further proceedings in this continuing litigation, while it remains engaged with the United States in negotiations to normalize the bilateral relationship. As always, Sudan expresses sympathy for the victims of the acts of terrorism at issue, but reaffirms that it was not involved in any wrongdoing in connection with those acts," Curran said in a statement to Law360.
Looking more broadly to the precedent's impact, even with the Supreme Court's affirmation that the 2008 amendment is retroactive, a statute of limitations and the limited number of countries that are currently designated state sponsors of terrorism by Congress limits the pool of victims to which the ruling applies very narrowly. Beyond the embassy bombing victims, there are only a few other judgments involving Iran — including suits over 1983 Beirut bombings — to which it would apply.
"The Supreme Court decision removes the cloud of doubt that had been cast on those other punitive damages awards," said McGill, who was tapped to argue on behalf of those seeking punitive damages at the Supreme Court.
Still, even getting compensatory damages actually paid out is a monumental task, according to several experts.
"At the end of the day, if you succeed in one of these, the goal is to get compensation for the victims and that's really hard to do," said J. Robert Duncan III, a Cadwalader Wickersham & Taft LLP associate who is representing terror victims in a D.C. Circuit suit against Syria.
Many terror victims have found some relief in the recently formed United States Victims of State Sponsored Terrorism Fund, which pools certain forfeited assets and splits the money between participating victims who have secured final judgments in U.S. courts. The funds are dispersed in rounds, meant to cover only compensatory damages, and victims can only secure 30% of their award through the fund until all other victims have also met that benchmark.
"Victims are very unlikely to receive full compensatory damages awards. You can get funding each time around, but it takes quite a while," Duncan said.
Sudan, in particular, is not a rich country, and there are few assets at the disposal of victims to try to secure compensation. Many of the victims, both American and non-American, have participated in the fund.
"The [Department of Justice] terrorism victim fund established by Congress has been one way for all the victims of the East African embassy bombings to get some compensation," Newberger said.
Bartley helped advocate for that fund, as well as a number of avenues of redress over the past two decades.
A law student at the time of the bombings, she helped organize victims and surviving family members in the immediate wake. She testified in a criminal case that convicted al-Qaida members involved in the bombings, and she has been a central figure and spokesperson in the cases against Sudan and Iran.
"It's a unique position to be in to be able to sue a state sponsor of terrorism. That became available to us many years later after the embassy bombings. We didn't know what would ever come of that. It was a very different state of play," Bartley said.
Over the years, she also spent a great deal of time knocking on lawmakers' doors, pushing for retroactive death benefits for those killed in terrorist attacks, securing benefits for not only those involved in the embassy bombings but other past and future attacks. She understands justice after a terrorism event can be a patchwork, she said.
Ultimately, what has driven her through the decades of trying to stitch together that patchwork is making sure the memories of her father and brother, and all the other victims, are kept alive and that the State Department does not forget about them.
"This is a new part of the chapter, a new part of the journey to actually have a bad actor held responsible," she said, speaking to Law360 on her father's birthday. "I know our loved ones would be very appreciative and proud of that. We want people not to forget."
Ultimately, the Supreme Court victory could have broader implications in that it signaled a certain openness by the justices to hold that foreign states are not "persons" for purposes of due process. This seemed to go away from the tone the court has previously taken on the topic.
The ruling suggests "that the court is not inclined to believe that constitutional protections apply to sovereign governments, a decision it hasn't explicitly made in previous cases but many lower courts have," Duncan said.
This could have implications for cases involving foreign sovereign immunity issues that are bubbling up in federal court against China over allegedly covering up the coronavirus pandemic in the early months, as well as against Saudi Arabia over its alleged role in 9/11.
"While there doesn't appear to be any immediate impact of this decision on those cases, it will tee up constitutional issues for these cases," Duncan said.
Minyao Wang, counsel at Hecht Partners who has significant cross-border litigation experience, is also keeping an eye on how the court's decision could influence congressional action in response to the coronavirus suits against China.
While the Supreme Court, it could be argued, was relatively generous in reading Congress' 2008 amendment to the FSIA as allowing punitive damages to be retroactive, if lawmakers decide to amend the FSIA to make challenges to China easier, they "would need to be very clear about the statute of amendment being retroactive," Wang said.
Attorney Theodore J. Folkman of Folkman LLC, however, hopes the issue will be resolved in the courts, rather than by congressional amendments, noting that various recent amendments to the FSIA and to 2016's Justice Against Sponsors of Terrorism Act have raised serious international law concerns.
"It's fair to say that the courts have done a much better job than Congress in looking out for the United States' long-term interests by adhering to international law when possible," Folkman said.
--Editing by Aaron Pelc.
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