BLOM Bank SAL v. Honickman

Issues

Whether the strict standard under Federal Rule of Civil Procedure 60(b)(6) always applies to a post-judgment request to vacate in order to file an amended complaint, or if a balancing test can be applied in lieu?

This case asks the Court to determine whether the strict standard under Federal Rule of Civil Procedure 60(b)(6) always applies to a post-judgment request to vacate in order to file an amended complaint, or if a balancing test can be applied instead. Petitioner BLOM Bank SAL argues that Federal Rule of Civil Procedure 60(b)(6)’s stringent standard must apply to a post-judgment request to vacate for the purpose of filing an amended complaint, contrary to the Second Circuit’s ruling. Respondent Honickman argues that Rule 60(b)(6)’s stringent standard need not apply to a post-judgment request to vacate for the purpose of filing an amended complaint, because the Second Circuit’s decision to use a balancing test serves as a better standard to review the Rule. BLOM Bank SAL argues that ruling in favor of Honickman would undermine the finality of judgments by allowing post-judgment amendments under Rule 60(b)(6) too liberally. Honickman counters by arguing that ruling in BLOM Bank SAL’s favor would prevent victims of terrorism from obtaining justice, particularly in cases where new evidence emerges post-judgement.

Questions as Framed for the Court by the Parties

Whether Federal Rule of Civil Procedure 60(b)(6)’s stringent standard applies to a post-judgment request to vacate for the purpose of filing an amended complaint.

Facts

The Justice Against Sponsors of Terrorism Act (“JASTA”) extends liability to people who knowingly provide substantial assistance to or conspire with those responsible for acts of international terrorism. , JASTA broadened the scope of the Anti-Terrorism Act (“ATA”) to allow victims of terrorist attacks to bring civil lawsuits against those indirectly supporting terrorism. Courts interpreting JASTA have required plaintiffs to demonstrate that a defendant had a general awareness of their role in terrorist activities and knowingly contributed substantial assistance to a terrorist organization.

Petitioner BLOM Bank SAL (“BLOM”), a Lebanese financial institution, was sued by victims of terrorist attacks carried out by Hamas. The respondents, Michal Honickman et al . (“Honickman”), alleged that BLOM Bank SAL provided financial services to three entities affiliated with Hamas, thereby facilitating terrorist activities. Honickman argued that BLOM Bank SAL was aware of its customers’ ties to Hamas and its banking services’ role in funding the attacks that caused their injuries. BLOM Bank SAL denied these allegations, contending that it provided routine banking services without knowledge of any illicit activities.

The United States District Court for the Eastern District of New York dismissed the case, ruling that Honickman failed to establish that BLOM Bank SAL had the requisite general awareness under JASTA. The District Court found that while Honickman alleged indirect support for Hamas, the District Court emphasized that JASTA requires more than a showing that a bank processed transactions for entities later linked to terrorism. According to BLOM Bank SAL, JASTA requires proof that the bank was aware of and intentionally facilitated terrorist activity. The United States Court of Appeals for the Second Circuit affirmed the dismissal, concluding that Honickman had not shown sufficient evidence of BLOM Bank SAL’s knowledge and substantial assistance. Honickman then sought to amend his complaint under Rule 60(b)(6), citing new evidence that allegedly confirmed BLOM Bank SAL’s awareness of its customers’ terrorist affiliations. The District Court denied the motion, stating that Honickman had multiple prior opportunities to amend their complaint and failed to show extraordinary circumstances warranting relief. Honickman appealed, and the Second Circuit reversed, ruling that the District Court should have considered Rule 60(b)(6) relief in light of Rule 15(a)’s liberal amendment policy, allowing plaintiffs to amend post-judgment. The Second Circuit held that the District Court applied an overly rigid standard in denying the motion, particularly given the complexity and evolving nature of terrorism financing investigations. The Second Circuit remanded to the District Court.

BLOM Bank SAL filed a petition for a writ of certiorari on May 29, 2024. On October 4, 2024, the United States Supreme Court granted certiorari .

Analysis

RULE 60(B)(6)’S CORRECT STANDARD

BLOM Bank SAL argues that Federal Rule of Civil Procedure 60(b)(6)’s stringent standard must apply to a post-judgment request to vacate for the purpose of filing an amended complaint, and the Second Circuit’s ruling to the contrary was wrongly decided. According to BLOM Bank SAL, the Second Circuit’s unconventional approach below to not apply Rule 60(b)(6)’s stringent standard conflicts with the text, structure, and history of the Federal Rules of Civil Procedure, as well as decades of Supreme Court precedent. BLOM Bank SAL claims that the Second Circuit’s ruling abandons the well-established and rigorous 'extraordinary circumstances' standard of Rule 60(b)(6) in favor of a vague balancing test that improperly incorporates Rule 15(a)’s 'liberal pleading principles' into the decision-making process for vacating a final judgment. BLOM Bank SAL contends that the balancing test, which requires a district court to “balance Rule 60(b)(6)’s finality principles with Rule 15(a)(2)’s ‘liberal amendment policy,’” was incorporated by the Second Circuit with no legitimate justification. BLOM Bank SAL furthers that the Second Circuit erred by relying on the case Foman v. Davis , which involved a question on Rule 59(e), a materially different rule than Rule 60(b). BLOM Bank SAL also believes that the Second Circuit’s balancing test conflicts with other provisions established in Rule 60, including the Rule’s “excusable neglect” and “mistake” time limitations, as well as the Rule’s limitations on the ability for a judgment to be vacated when new evidence arises. BLOM Bank SAL finalizes its claim by asserting that the Second Circuit’s balancing test undermines the Federal Rules of Civil Procedure’s provisions and safeguards. BLOM Bank SAL argues that the Second Circuit’s balancing test runs counter to the Federal Rules of Civil Procedure’s governing principle that the rules “secure the just, speedy, and inexpensive determination of every action and proceeding.” BLOM Bank SAL adds that if the Second Circuit’s balancing test was legitimized over the contemporary stringent standard, it would allow plaintiffs in other lawsuits to appeal their cases by amending their complaint long after a final judgment has been entered, impacting the true finality of a judgment.

Honickman argues that Federal Rule of Civil Procedure 60(b)(6)’s stringent standard does not need to apply to a post-judgment request to vacate for the purpose of filing an amended complaint because the Second Circuit’s opinion is non-precedential and should only apply to the unique facts of the case. Honickman asserts that the Second Circuit was not erroneous in applying a balancing test rather than the stringent standard, as the balancing test is consistent with other federal courts’ post-judgment amendment jurisprudence. Honickman furthers that the Second Circuit’s balancing test is a better standard than the conventional stringent standard because it combines the stringent standard with the standard used in Rule 15(a) of ensuring cases are decided on the merits. Moreover, Honickman contends that even when applying the stringent standard of Rule 60(b)(6), the Supreme Court and circuit courts have previously balanced the standard with the broad judicial principle of ensuring finality. Honickman explains that courts have done this when applying the stringent standard of Rule 60(b)(6) in order to ensure that parties have had an ample and honest opportunity to amend their pleadings. Honickman argues that this exact reasoning allows better assurance for each party to have had a reasonable opportunity to amend their pleadings, balanced with a penchant for judicial decisions to be final once ruled upon. Honickman finalizes his argument by mentioning that circuit courts, including the D.C. Circuit and the Seventh Circuit Court of Appeals, have continuously supported amending the stringent standard in the name of ensuring pirates have a fair and equal opportunity to amend their pleadings.

PRESENCE OF EXTRAORDINARY CIRCUMSTANCES

BLOM Bank SAL argues that the Second Circuit erroneously disagreed with the District Court’s correct interpretation of Rule 60(b). BLOM Bank SAL claims that only an "extraordinary circumstance,” meaning “a definite and firm conviction that the [lower] court committed a clear error of judgment,” would permit the Second Circuit to review the District Court’s decision. BLOM Bank SAL asserts that these extraordinary circumstances did not occur in the district court because the Second Circuit extensively relied on and agreed with the District Court’s reasoning in their own ruling. BLOM Bank SAL furthers that even if the District Court’s reasoning was incorrect, Honickman waived multiple opportunities to amend the complaint before the District Court made its ruling. BLOM Bank SAL contends that because Honickman waived the opportunity to amend the complaint twice after new facts came about, once at pre-motion conference and again at oral argument regarding BLOM Bank SAL’s motion to dismiss, Honickman forfeited the opportunity to amend the complaint. BLOM Bank SAL asserts that Honickman improperly delayed amendment to the complaint and filed it only after the District Court made its ruling as a strategic decision to obtain an unwarranted appeal. BLOM Bank SAL finalizes its argument by mentioning that Honickman did not meet the "extraordinary circumstances” standard because Honickman only amended the complaint at the time they did to easily get the case heard by the Second Circuit.

Honickman counters that “extraordinary circumstances” were present, and thus the Second Circuit did not erroneously review the decision. Honickman explains that the Second Circuit previously defined “extraordinary circumstances” under a multi-factor test, requiring a plaintiff to show that “[1] Plaintiffs have yet to be afforded a single opportunity to amend their pleading; [2] the original dismissal of the Complaint was premised on grounds subject to reasonable, actual, and vigorous debate; [3] Plaintiffs diligently prosecuted their case at all times; and [4] Plaintiffs’ proposed amendments address the sole pleading deficiency identified by the district court.” Honickman claims to have met all four of these factors. Honickman argues the first, second, and third factors are met because the opportunities BLOM Bank SAL claims existed were not open for an amended complaint to be filed, seeing as the motion to dismiss was extensively argued. Further, Honickman claims the fourth factor is met because if afforded the opportunity to amend the complaint, the proposed amendment “could address the actual defects in the complaint that the Second Circuit identified.” Honickman further posits that because all four of these factors are satisfied, denying that extraordinary circumstances exist hampers Honickman’s ability to seek proper justice. Honickman asserts this because the statute of limitations has been exhausted, meaning a new complaint would be dismissed.

Discussion

JUDICIAL FINALITY: PRESERVING PROCEDURAL INTEGRITY

BLOM Bank SAL argues that allowing post-judgement amendments under Rule 60(b)(6) without demonstrating extraordinary circumstances would significantly weaken the principle of finality in judicial decisions. According to BLOM Bank SAL, this could lead to prolonged litigation where plaintiffs continuously seek to amend their complaints after judgment, disrupting the judicial process. BLOM Bank SAL further asserts that the Second Circuit’s balancing test undermines well-established procedural safeguards by allowing the liberal amendment principles of Rule 15(a) to dilute the strict post-judgment standard set by Rule 60(b)(6). According to BLOM Bank SAL, this leads to wasteful relitigation, which would not be speedy or inexpensive.

In response, Honickman contends that while finality is a crucial principle, courts also recognize the importance of allowing plaintiffs the opportunity to amend their complaints once they are made aware of actual defects. Additionally, Honickman asserts that while Rule 15(a) does independently justify vacatur, its principles can inform the analysis under Rule 60(b)(6) when considering whether extraordinary circumstances justify an amendment. Moreover, Honickman highlights that denying plaintiffs the opportunity to amend risks a significant injustice, as plaintiffs may lose their only chance to have their case decided on the merits due to the expiration of the statute of limitations.

POST JUDGMENT AMENDMENTS AND RULE 59

BLOM Bank SAL argues that allowing parties to circumvent the strict limitations of Rule 59 by using Rule 60(b)(6) could erode the finality of judgments. BLOM Bank SAL contends that Rule 59 establishes a time-sensitive framework for reconsidering judgments, ensuring that all relevant arguments and evidence are presented promptly and within a defined period. It argues that allowing Rule 60(b)(6) to override these strict timelines would weaken procedural safeguards and encourage inefficiency by enabling litigants to delay presenting pertinent facts until after judgment has been rendered.

Honickman responds by acknowledging the importance of procedural distinctions between Rule 59 and Rule 60(b)(6) but contends that BLOM Bank SAL’s reliance on this separation is overstated. Honickman contends that BLOM Bank SAL’s reliance on the distinction between these rules does not diminish the relevance of the Supreme Court’s decision in Foman v. Davis , where the Court accepted treating a motion under Rule 59(e) without suggesting that different vacatur standards should apply. Honickman argues that a rigid application of Rule 59 could lead to unjust outcomes by burying legitimate claims due to the expiration of the statute of limitations, emphasizing that courts regularly recognize the importance of granting plaintiffs an opportunity to amend their complaints once made aware of actual defects.

Conclusion


Zachary Jacobson and Zaria Goicochea

Tedrick Au

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