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Peterson v. Iran (9th Cir. - Dec. 3, 2010)

By Shaun Martin

We just went over affirmative defenses in my Civil Procedure I class.  What counts as one, as well as what the consequences are of not raising it.

Think it matters?  It does here.  To the tune of over two billion dollars.

This is admittedly a somewhat unusual case, and involves plaintiffs who sued Iran -- successfully -- for sponsoring the 1983 bombing of the U.S. Marine barracks in Beruit.  Plaintiffs got their $2.6 billion-plus judgment by default and then moved to enforce it -- no easy task -- by attempting to seize Iran's right to obtain payments from a French shipping company that does business in Iran.

The district court raised the issue of Iran's sovereign immunity sua sponte and denied the requested seizure.  The Ninth Circuit, in an opinion by Judge Betty Fletcher, affirms.  Judge Randy Smith dissents, arguing that sovereign immunity is an affirmative defense that Iran waived by failing to defend the action.

It's a good discussion on both sides.  The Ninth Circuit joins the Fifth Circuit in so holding, but the Seventh Circuit has a pending appeal that raises the same issue.  Particularly given the stakes involved, Judge Smith's dissent gives plaintiffs a tolerable (but by no means certain) shot at certiorari.  Though it's possible that the Supreme Court would wait until the Seventh Circuit decides to see if there's a circuit split.  Plus may not want to get into troubling foreign affairs issues like this one unless it absolutely needs to.

But for now, plaintiffs are out of luck.  Sorry about that.  Congratulations -- I guess -- to Iran.  Not the most sympathetic defendant, but it wins this one.

Full post as published by California Appellate Report on December 03, 2010 (boomark / email).