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A panel of the 1st U.S. Circuit Court of Appeals wrestled with whether to vacate a district court’s $116 million default judgment against the Palestinian Authority and the Palestine Liberation Organization stemming from the killing 14 years ago of a U.S. citizen by Palestinian terrorists. On Jan. 7, a three-judge panel that included retired U.S. Supreme Court Justice David Souter heard oral argument in Ungar v. The Palestine Liberation Organization, on appeal from the District of Rhode Island. Yaron Ungar and his pregnant Israeli wife were killed in Israel by a Hamas attack in 1996. The 10-year-old Ungar case, which involves only Ungar’s death because only he was a U.S. citizen, is on its third trip to the 1st Circuit. The plaintiffs, including Ungar’s estate and the couple’s parents, children and siblings, originally filed suit under the Anti-Terrorism Act, which allows private suits against parties responsible for killing or injuring U.S. nationals in terrorist incidents. In this round, the 1st Circuit will consider whether the district court abused its discretion by denying the defendants’ motion to vacate the default judgment on the sole ground that the defendants willfully defaulted on the case. Palestine’s government, the Palestinian Authority, and the PLO claimed that the district court ignored other material factors, including the defendants’ defenses on the merits; the good faith efforts of the current leadership of the Palestinian Authority and the PLO to normalize relations with the United States by participating in litigation; and the foreign policy impact of enforcing the $116 million default judgment against the defendants. The defendants’ brief also notes that the award is for an attack carried out by Hamas extremists, “not by individuals acting with the support or under the direction of the [Palestinian Authority] or PLO.” The judges’ early questioning of the PLO’s attorney, Laura Ferguson, a partner at Washington-based Miller & Chevalier, centered on their concerns about taking away a district court judge’s discretion to rule on motions to vacate. Judge Bruce Selya said the court needed to consider how the Federal Rules of Civil Procedure have committed certain types of decisions to the discretion of the trial courts. “Our decisions have recognized an institutional interest in letting the trial court do the trial court’s job,” Selya said. Ferguson replied that appeals courts have stepped in and reversed district courts in a number of cases involving foreign governments. Selya countered that those cases involved instances in which the district courts applied the right standards but “made a mistake in judgment. [...] You’re suggesting we throw out the district court decision because it was based on the wrong standard.” Selya later put the Ungar side’s attorney, David Strachman of Providence, R.I.-based McIntyre, Tate & Lynch, on the hot seat for asserting that the respondents had ample opportunity to mount a defense on the merits earlier in the litigation. “Isn’t that the most rank kind of bootstrapping?,” Selya asked. “They’re saying this was a mistake in strategy by a regime that went out of control so this case wasn’t defended. We now have a sensible regime in place, so we want to remove the default [judgment] and litigate.” “You’re trying to cut off their argument by saying everything has already been decided because they could have contested everything,” Selya added. Souter said Strachman was asking the panel to conclude that there was no way the district court could have weighed all the factors and vacated the judgment. “How could we do that, given the amount of the judgment?,” Souter said. “We’re dealing with a wrongful death case, two deaths and a recovery in excess of $100 million. That’s not a basis for a slam dunk.” The far-ranging hearing touched on Palestine’s political developments, the availability of witnesses and documents after so many years and the amount of the judgment. In response to a question from Judge Kermit Lipez, for example, Ferguson acknowledged that a bond posting would be appropriate, “given that the plaintiffs have invested a lot of time and energy,” but $116 million shouldn’t be the starting point. “In the unlikely event that if the PLO or PA were to lose, I think it’s highly unlikely the damage would be $116 million for the death of one individual,” Ferguson said.

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