Boeing Must Produce Iran Air Contract to Terror Victims

Trump administration puts national security over trade.

The Trump administration pointedly put national security over trade when it told an Illinois District Court judge it “does not take a position” on whether the Court should shield aerospace giant Boeing Corp from a lawsuit filed by victims of Iranian state terrorism.

The family of Shlomo Leibovitch is seeking to collect on a $67 million judgment against Iran for a 2003 terror attack that killed their seven-year old daughter, and sued Boeing to gain access to what it believed were Iranian assets in Boeing’s possession.

Boeing signed a $16 billion deal in 2016 to sell civilian airliners to the state-owned Iran Air, a defendant in numerous lawsuits by victims of Iranian state-sponsored terrorism. In any airplane deal of that size, the purchaser will make advance payments while the aircraft are being produced.

It was those payments the Leibovitch family was seeking to attach and that Boeing was seeking to conceal.

Chief Judge Ruben Castillo ruled on Tuesday that Boeing must produce the contractual documents to the terror victims, to include financial documents relating to advance payments as well as Boeing’s communications with the Treasury Department Office of Foreign Assets Control, which licensed the sale during the final weeks of the Obama administration.

Boeing had argued to keep all details of its commercial and financial dealings with the Iranian regime secret, on the grounds that disclosing them would cause “significant harm to the goals of the United States and its European allies.”

As Judge Castillo noted in his ruling, Boeing claimed that disclosure would “risk destabilizing the purpose of the JCPOA [the Joint Comprehensive Plan of Action, aka the Iran nuclear deal] to provide for regional and international peace and security.”

That’s a heavy lift even for Boeing, which specializes in heavy-lifting.

Judge Castillo thought it best to ask the U.S. government if they agreed with Boeing’s claim that disclosure would “interfere with U.S. foreign policy toward Iran.”

The answer, delivered by the U.S. Department “on behalf of the Executive Branch,” was crystal clear – and a stinging rebuke not just to Boeing, but to all major U.S. and international corporations who believe that the Iran deal opened Iran for business.

The Justice Department formally notified Judge Castillo that “the United States does not take a position on whether the Court should order the requested discovery.”

That one line opens up a legal mine field for Boeing, and for any other U.S. corporation seeking to do business with the Islamic regime in Iran.

U.S. courts have awarded victims of Iranian state terrorism 99 separate judgments worth more than $53 billion, nearly half of which are compensatory damages that can be collected against Iranian assets held outside the United States.

“But how to collect?” an appeals court judge stated in an opinion last year. That has been the problem that has devilled not only the Leibovitch family, but each and every one of the hundreds of U.S. citizen holding judgments against Iran.

In his landmark decision, Judge Castillo opened a door that previously had been closed.

The Iran nuclear deal paved the way for corporations around the world to re-enter the Iranian market, shut off for years by multi-lateral sanctions put in place to punish Iran for pursuing a clandestine nuclear weapons program forbidden it by international law.

Israeli attorney Nitsana Darshana-Leitner filed suit in 2015 against the U.S. Department of State and the Department of Treasury in New York on behalf of the Leibovitch family to block implementation of the Iran nuclear deal, which involved not only the lifting of sanctions but the release of an estimated $150 billion in frozen Iranian assets.

While that suit failed, Judge Castillo ruled that the current case was not about deciding a “political question” outside the purview of the Court, but about “a discovery dispute, plain and simple.”

“[T]he present dispute does not require the Court to consider the wisdom of the [Foreign Sovereign Immunity Act] or the Iran Nuclear deal,” Castillo noted.

Boeing had argued that the Iran nuclear deal required the U.S. government “to actively prevent terror victims holding judgments against Iran from hindering he airplane deal in any manner.”

But the Trump administration swept away that argument, noting that “the JCPOA does not require the United States to take any specific action with respect to efforts by judgment creditors of Iran to pursue post-judgment discovery or other enforcement proceedings.”

The Leibovitch family has not been alone in seeking to put the kibosh on the Boeing aircraft sale to Iran.

Last year, Representative Peter Roskam (R-Il), and Senator Tom Cotton (R-AR), wrote to Attorney General Jeff Sessions, urging the Justice Department to support the claims of the terror victims over Boeing. Roskam did so even though Boeing is now headquartered in his state.

Corporate lawyers and plaintiff’s attorneys around the world will be following this case closely. With the Boeing sale now potentially in jeopardy, other corporations are sure to wonder if they, too, could be made to pay the price for the terrorist actions of the Iranian regime.